South Korean Ship Sinking
South Korean Ship Sinking:Gold futures leapt while stock markets and Treasury yields fell after South Korea reported a naval ship sank off the island of Baengnyeong in the West Sea, near the border with North Korea.
“We had an oversold condition and when the Korean news hit the desks, gold took off,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.
Gold futures for June delivery rose $ 9.90, or 0.9%, to U.S. $ 1,104 an ounce at 11:51 am on the Comex in New York, after earlier rising as much as 1.3%.
U.S. stocks trimmed gains as concern that tensions between North and South Korea were escalating snuffed out most of an early advance.
The iShares MSCI South Korea Index Fund, a U.S. exchange-traded fund tracking stocks in that nation, slid 1.1%.
The Standard & Poor’s 500 Index was little changed at 1,165.93 as of 12:37 pm in New York after Gaining as much as 0.7% earlier. The Dow Jones Industrial Average rose 6.28 points, or less than 0.1%, to 10,847.49.
“This is really all about the variable that we call the geopolitical; it’s about Korea,” said Peter Kenny, a managing director in institutional Sales at Knight Equity Markets LP in Jersey City, New Jersey. “It’s taken some of the euphoria out of the market.”
Canadian stocks were also down. The S & P / TSX Composite Index decreased 27.41 points, or 0.2%, to 11,930.70 at 1:34 pm in Toronto. It advanced as much as 0.7% earlier.
“There’s some Korean tension going on right now with a ship that went down; that’s what the market is reacting to,” said Barry Schwartz, who helps manage C $ 340 million as a money manager at Baskin Financial Services Inc.. in Toronto. “The market is looking for an excuse to sell off, and we got an excuse today.”
The two-year Treasury note yields fell on speculation investors are seeking refuge in government securities on the reported sinking.
A ship with crew on board was sinking off the island of Baengnyeong in the West Sea, near the border with North Korea, a presidential office official said, declining to be identified.
“The Korean story may be having a minor impact and adding to the Firming in the front end of the curve, but whether it’s gotten out into the market or not is unclear,” said Andrew Brenner, managing director at Guggenheim Capital Markets, a New York-based brokerage for institutional investors.
The two-year yield dropped 3 basis points, or 0:03 percentage point, to 1:06 percent at 11:10 am in New York, according to BGCantor Market Data. The price of the 1% security due in February 2012 increased 2 / 32, or 63 cents per $ 1,000 face amount, to 99 7 / 8.
