Safe-haven gold and US Treasuries prices held steady yesterday while US stocks edged lower as investors fretted about global geopolitical risk and the upcoming US corporate earnings season.
US Treasury yields were little changed as demand tied to worries about Syria and North Korea offset investor selling ahead of a 30-year bond auction.
Oil prices reversed earlier gains after a report on US crude stockpiles suggested the market was still heavily supplied. On Wall Street, defensive sectors were among the brightest spots in keeping with preferences for safety.
“The geopolitical tension has not escalated but it’s not going away either,” said Mary Anne Hurley, vice president of fixed income at D.A. Davidson in Seattle.
US President Donald Trump said in a tweet on Tuesday North Korea was “looking for trouble” and the United States would “solve the problem” with or without China’s help the day after Pyongyang warned of a nuclear attack on the United States at any sign of American aggression.
However Chinese President Xi Jinping yesterday stressed the need for a peaceful solution for the Korean peninsula on a call with Mr Trump.
Russian President Vladimir Putin yesterday said trust had eroded between the United States and Russia under Mr Trump as Moscow delivered an unusually hostile reception to US Secretary of State Rex Tillerson in a face-off over Syria.
The Dow Jones Industrial Average fell 55.23 points, or 0.27 per cent, to 20,596.07, the S&P 500 lost 8.13 points, or 0.35 per cent, to 2,345.65 and the Nasdaq Composite dropped 24.92 points, or 0.42 per cent, to 5,841.85.
Aside from politics investors were hoping quarterly earnings would support lofty valuations on Wall Street ahead of big bank earnings which unofficially kick off the season on Thursday.
“It would be very important what they [banks] offer as forecast because stock prices imply better times ahead and investors are looking for assurances and positive forecasts to be issued,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.
Europe’s STOXX 600 was up 0.2 per cent but was well below its high of the day. Gold was up 0.2 per cent at $1,276 an ounce, its highest since November 10, after jumping 1.6 per cent on Tuesday.
The dollar index, which measures the greenback against a basket of six other major currencies, was down 0.17 per cent after hitting its lowest since April 7.
The dollar was still down slightly against the yen, after falling to its lowest in nearly five months earlier in the day against the Japanese currency, a favorite in times of stress due to Japan’s position as the world’s largest creditor nation.