North Korea talk drags global stocks lower; gold, yen rise

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The CBOE Volatility Index - a measure of investors' expectations for swings in the S&P 500 over the next 30 days - surged 44% to 16.04 Thursday - its highest level since U.S. Election Day.

"We do just not know what happens next with the North Korea situation", said BNY Mellon FX strategist Neil Mellor.

At 10:34 a.m. ET (1434 GMT), the Toronto Stock Exchange's S&P/TSX composite index fell 70.95 points, or 0.47 percent, to 15,146.38.

The CBOE Volatility Index, the most widely followed barometer of expected near-term USA stock market volatility, rose the most in about 12 weeks. Systemic funds trade utilising a rules-based approach, which would largely be dictated to by the underlying market trend. The S&P 500 and Dow were both coming off record highs. "Risk aversion is still very much a concern for markets", said Shaun Osborne, chief currency strategist at Scotiabank in Toronto. The stock was the biggest gainer in the S&P 500, adding $8.02 to $45.25.

"For quite some time the market hasn't really reacted to things on the Korean Peninsula because we know from the past it is largely North Korean sabre-rattling, and it may yet be".

European markets closed lower: London's FTSE lost 0.6 per cent, Paris fell 1.4 per cent and Frankfurt dipped 1.1 per cent. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 2.192%.

IG's Volatility index (September contract) has attracted buyers through August, off what looks like a solid floor of 12.3.

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The British Steel Pension Scheme said it would write to its members in the next few weeks about the new scheme. The UK's steel sector trade unions, Community, Unite and GMB, put out a joint statement welcoming the move.

Financial services group Old Mutual posted a sharp 37% rise in adjusted pre-tax profits to £969m, helped in part by £108m of proceeds from the sale of its OMAM unit although it did incur in a goodwill impairment charge of £71m linked to UAP-Old Mutualin East Africa.

The Swiss franc rallied hard against the euro and the USA dollar on Wednesday, as increased tensions between the United States and North Korea led investors to look for assets deemed as less risky.

Secretary of State Rex Tillerson assured the public Wednesday morning that there was "no imminent threat" and that Americans "should sleep well at night".

"We're not very oversold yet so the market still has more downside left to it", said Robert Pavlik, chief market strategist at Boston Private Wealth in NY.

Wall Street got bathed in a sea of red Thursday amid mounting tensions between the USA and North Korea.

The two other variables I have mentioned would take some time to play out, especially with global growth being somewhat inspiring for the equity bulls in 2017.

The weaker-than-expected pair of economic reports came a few hours ahead of a speech by New York Fed President William Dudley suggesting the central bank was on track to raise interest rates once more and begin shedding some bond holdings this year. The last two times we saw this factor materialise was in 2001 and 2008 and in both cases we saw the United States head into a recession shortly after. Even so, the close was the highest in a month.

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