Weekly wrap Aug. 11, 2017: North Korea fears rattle markets
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By Fund Library News Wire  | Friday, August 11, 2017


By Mike Keerma

The major North American stock indices retreated through the week, as tensions escalated between North Korea and the U.S. The CBOE Volatility Index (VIX), often referred to as the “fear gauge,” climbed to 15.51, its highest level since last November. Soft U.S. inflation in July combined with geopolitical fears to produce a -1.4% loss for the S&P 500 Composite Index on the week, while the Nasdaq Composite Index fell -1.5%. Toronto’s benchmark S&P/TSX Composite Index fell 2% as energy stocks retreated on a -1.5% decline in the price of crude oil on the week. Living up to its safe-haven status, gold gained 2.4% on the week, boosting the gold mining sector. The Canadian dollar also lost ground, closing the week at US$0.7807 as investors sought shelter in traditional strong currencies like the U.S. dollar, Swiss franc, and Japanese yen.

The U.S. consumer price index rose a seasonally adjusted 0.1% month over month in July, as did the less volatile core measure, which excludes food and energy prices. U.S. CPI rose at a 1.7% annual rate, while the core rate, which is one measure closely watched by the Federal Reserve, held steady at an annual 1.7%. Despite second-quarter U.S. gross domestic product growing at respectable annual 2.1% rate, the Fed is unlikely to pull the trigger on another rate hike anytime soon. With inflation still below the Fed’s target 2.0%, real wages climbing at an annual 0.7%, and the unemployment rate down to 4.3%, most observers believe the Fed has no reason to raise rates again until December at the earliest.

In company news, two of Canada’s largest insurance companies reported strong earnings in the second quarter, boosted by growth of their business in Asian markets. Manulife Financial Corp. (TSX: MFC) posted core profits of $1.17 billion ($0.57 per share) for the quarter, compared with $833 million ($0.40 per share) in the same quarter a year ago. Sun Life Financial Inc. (TSX: SLF) reported net income of $574 million ($0.93 per share), compared with $480 million ($0.78 per share) in the year-ago quarter.

Check Fund Library’s Market Activity page regularly for active updates on key market indexes and commodities.

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The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

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