In his latest warning to North Korea, U.S. President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".
THE QUOTE: "Risk-averse sentiment is dominating global equities markets, and US indices have retraced from record levels over the last two days".
The S&P 500 Index closed 1.5 per cent lower, the Nasdaq Composite dropped 2.1 per cent and the Dow Jones Composite fell 1.4 per cent.
The CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the election.
Unease over the situation pushed the VIX, a measure of how much volatility investors expect in stocks, up 44.4 percent. "Although it is considered highly unlikely that this tension will escalate into a nuclear war, the market still needs to see how President Trump will eventually deal with his advocating "fire and fury" against North Korea's threat", said Margaret Yang Yan, market analyst at CMC Markets Singapore.
The news was also greeted with dismay by traders in Asia, with Tokyo down 1.3 percent, Hong Kong losing 0.4 percent and Seoul registering a 1.1-percent decline.
Several financial sector companies also helped pull down the market. The Russell 2000 index of smaller-company stocks gave up 19 points, or 1.4 percent, to 1,377.
RETAIL SLUMP: Disappointing quarterly results from big department store chains put investors in a selling mood.
Shares of Kohl's were down 8.4 percent, while Macy's fell 4 percent after the department store operators reported a fall in sales. Dillard's slumped 15.5 percent after the chain booked a loss for the second quarter as increased inventory led to big discounts. Kohl's also declined, sliding $2.66, or 6.3 percent, to $39.28.
Blue Apron shares hit a record low at $5.03 after the meal-kit delivery service provider reported a bigger-than-expected loss in its first quarterly report as a public company.
ENERGY: Benchmark U.S. crude gained 28 cents to $49.84 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price worldwide oils, added 26 cents to $52.96. The u.s. central bank, one of whose tasks is to contain the price rise, does not therefore appear to be obliged to accelerate the pace of the slow tightening of monetary that it has committed.
An hour after trading opened this morning, the S&P/NZX50 index was down 79.2 points, or 1 per cent, to 7,710.51. The Dow shed 0.2 percent. Germany's DAX fell 0.9 percent, while the CAC 40 in France lost 0.5 percent. The September copper contract was down two cents to US$2.91 a pound. Against the euro, the dollar is valued at $1.826 compared to yesterday's $1.1772.
MARKETS OVERSEAS: Major indexes in Europe were headed lower. Australia's S&P/ASX 200 edged down almost 0.1 percent.