“There was obviously some profit-taking after a couple of weeks of strong performance,” said Bertram Lai, head of equities at CIMB Securities in Hong Kong.
Selling was led by some of this year’s best-performing markets. Hong Kong shares started sliding after a quiet first 30 minutes, sending the Hang Seng Index HSI, -1.13% down 1.1% for the day. Financial stocks led the way; HSBC 0005, -1.48% HSBA, -1.94% HSBC, -3.02% ended down 1.5%, as were major Chinese-based companies. The market has been on fire the past month, up in 19 of 22 sessions before a broad pullback Wednesday on the rising geopolitical worries.
Other markets in the region began falling notably at about the same time as Hong Kong, and indexes in Korea and Taiwan — among the world’s best performers of late, hitting record and 27-year highs, respectively — ended in the red.
As in Hong Kong, financials were weak in Taiwan, as were some big-name tech stocks. Apple suppliers Largan 3008, -2.89% and Hon Hai 2317, -1.69% fell 2.9% and 1.7%, respectively.
In a second day of specific threats aimed at the U.S., North Korea lashed out at President Donald Trump and warned of an “enveloping fire” in the coming weeks targeting Guam.
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This latest geopolitical row offered the perfect excuse for some folks looking to harvest profits, said Bright Smart Securities.
The ratcheting-up of tensions comes during what’s often a slow trading time for markets in general as many people in the Northern Hemisphere take late-summer holidays.
Big price swings are common at times of low volume, and the current one is likely to persist for the rest of the month, said Rob Carnell, head of research for Asia at ING.
In China, the small-cap-heavy ChiNext index 399006, -0.53% started with a bang, rising nearly 1%, but finished the day down 0.5%.
Markets in Australia and New Zealand, which rose Wednesday as Asia Pacific markets fell widely, ended slightly lower on Thursday. While Australian stocks XJO, -0.08% have lagged behind the region this year, New Zealand’s benchmark has been hitting record highs of late.
Meanwhile, Japan’s Nikkei 225 index NIK, -0.05% slipped 0.1% as the dollar USDJPY, -0.09% steadied around ¥110 and investors stayed cautious ahead of a three-day weekend.
The Stoxx Europe 600 SXXP, -1.00% fell 1% to 376.05, led by losses in the industrial group. The utility and health-care sectors were the only ones showing gains. The pan-European benchmark on Wednesday fell 0.7% in a selloff prompted by tensions between the U.S. and North Korea escalated.
“European stocks have suffered heavy losses again because of the situation between the U.S. and North Korea,” said David Madden, market analyst at CMC Markets, in a note.
“The showdown between the two nations has scared off many investors. Whenever dealers hear the word ‘war’ they usually run for the hills, and that is exactly what we have seen today. While tensions are running high, traders will be reluctant to be long,” he added.
On Thursday, Germany’s DAX 30 DAX, -1.15% lost 1.2% to 12,014.30. The index briefly dipped to 11,993.73, trading below the 12,000 level for the first time since April.
France’s CAC 40 index PX1, -0.59% fell 0.6% to 5,115.23, while in London, the FTSE 100 UKX, -1.44% moved down 1.4% to 7,389.94, for its biggest one-day percentage loss since April.
Those moves came after North Korean leader Kim Jong Un made an explicit threat to strike a U.S. military base in Guam.
His order, reported in state media, came hours after U.S. President Donald Trump late Tuesday warned Pyongyang not to “make any more threats” to the U.S, saying it would face a “fire and fury” response “like the world has never seen.” Trump’s comments came after a Washington Post report that North Korea has built a miniaturized nuclear warhead.
European equities on Thursday didn’t find much relief from a pullback in the euro, with the shared currency EURUSD, -0.0425% buying $1.1730, down from $1.760 late Wednesday in New York.
Stock movers: Henkel HEN3, -3.82% fell 4.1% after the maker of Schwarzkopf hair care products, Right Guard deodorant and Persil detergent posted second-quarter organic sales growth of 2.2%, which was below consensus of 3.2%, according to Investec.
“Henkel’s Beauty has underperformed peers for several years and given the results this morning, this trend looks set to continue — at least over the near-term,” said Investec analyst Eddy Hargreaves in a note.
Adecco Group AG shares ADEN, -6.41% fell 6.4%. The staffing services company posted a rise in second-half profit to €192 million, and analysts polled by Thomson Reuters had expected earnings of €194 million.
Aegon NV AGN, +5.30% climbed 5.3% as the Dutch insurer reported a 23% rise in underlying earnings and said it’s selling its Aegon Ireland PLC business to help increase financial flexibility.
Galapagos NV GLPG, +8.30% soared 8.3% after the company posted positive clinical trial results of a pulmonary fibrosis treatment.
Shares of SFR Group SA SFR, +9.22% rallied 9.2% after Altice NV ATC, +0.92% raised its stake in the French telecoms company to more than 95% and said it’s planning a full buyout.
All three major equity benchmarks finished sharply lower on Thursday for their worst day since mid-May, with the trifecta of indexes all tumbling for a third straight session for the first time since mid-April, amid a persistent war of words between the U.S. and North Korea.
Dow Jones Industrial Average DJIA, -0.93% closed down 204.69 points, or 0.9%, at 21,844.01, finishing near the lows of the session, as Apple Inc. AAPL, -3.19% shares sank 3.2% and Goldman Sachs Group Inc. GS, -2.39% shares gave up 2.4%. Only three out of 30 Dow components finished higher.
The S&P 500 index SPX, -1.45% dropped 35.81 points, or 1.5%, to finish at 2,438.21, with 10 of the index’s 11 sectors closing in the red. Tech shares sank by 2.2%, with the financials, consumer-discretionary, energy and industrials sectors all falling at least 1.3%.
The tech-laden Nasdaq Composite Index COMP, -2.13% plummeted 135.46 points, or 2.1%, to close at 6,216.87.
Thursday also marked the worst one-day percentage drop for all three benchmarks since May 17, according to FactSet data..
All three stock gauges closing down for a third day in a row last occurred since April 13, according to WSJ Market Data Group. The Dow is currently 1.2% off its closing record, while the S&P 500 is 1.7% off and the Nasdaq is 3.2% off their respective all-time highs
Geopolitical tension gained momentum on Thursday, after a North Korean army commander said, “sound dialogue” isn’t possible with President Donald Trump and “only absolute force can work on him,” according to state media. North Korea also laid out detailed plans of how it would launch a missile strike on U.S. military bases in Guam.
Brian Nick, chief Investment Strategist for TIAA Investments, which has $938 billion in assets under management said few catalysts remain to push stocks higher after earnings season is near wrapping up, which may give added significant to concerns about unease between North Korea and the U.S.
“What will markets take a cue from in that information gap? If it’s North Korea, I don’t think this will be a fruitful period for equity investors,” Nick said.
Stocks finished off their lows, but still held on to losses Wednesday, as investors remained anxious about the U.S.-North Korea war of words and a clutch of disappointing earnings reports.
Some investors, however, still maintained a bullish outlook on equities, expecting the war of words not to manifest into a military clash, with the pullback being temporary.
“The move down now is geopolitical, and short-lived if nothing happens,” Joe Saluzzi, co-head of equity trading at Themis Trading.
Saluzzi sees the North Korea concern as an excuse for traders to sell off in a market near record highs given the strength of earnings season and fairly good economic data that have come out recently. And if that sort of downtrend continues, it would be the kind that many investors have been looking for after 283 trading days without a pullback of 5% or more.
“People want to digest the move and a downtrend now totally makes sense,” Saluzzi said. “If the Dow drops 1,000 points over a week that might sound like a lot but it’s 5%, and then I think it blows over and buyers start talking about next quarter’s earnings.”
Meanwhile, traders absorbed a report on jobless claims that showed that initial claims for U.S. unemployment-insurance benefits continue to reflect a strong labor market, even as they inched slightly higher. The number of people who applied for U.S. unemployment-insurance benefits rose by 3,000 to 244,000 in the week that ended August 5, the Labor Department reported.
Economists polled by MarketWatch had expected the government to report that initial claims for regular state unemployment-insurance benefits rose 2,000 to 242,000.
And U.S. wholesale prices declined in July for the first time in almost a year, providing additional evidence of tepid inflation that is bedeviling the Federal Reserve.
Economic docket: New York Federal Reserve President William Dudley said reaching the Fed’s 2% inflation target this year is going to be tough even if monthly data begins picking up.
Stocks to watch: Blue Apron APRN, -17.63% shares tumbled nearly 18%, despite a beat on revenue. Shares of Kohl’s KSS, -5.80% tumbled by 5.8% after an earnings beat.
Macy’s M, -10.25% slipped more than 10% as the retailer reaffirmed downbeat guidance, but reported second-quarter earnings and revenue that beat expectations. Net income was $116.0 million, or 38 cents per share, up from $11.0 million, or 3 cents per share, for the same period last year.
Live Nation Entertainment Inc. LYV, +5.63% shares pared gains from strong earnings reported late Wednesday and closed up 5.6% after reports that Amazon.com Inc. AMZN, -2.55% announced it was getting into the event-ticketing business. Amazon shares finished down 2.6%.
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Perrigo Co. PRGO, +15.78% shares rallied nearly 16% after the drugmaker topped Wall Street estimates for the quarter.
Other markets: Investors’ appetite for assets perceived as haven in times of geopolitical trouble ebbed slightly. The Swiss franc gave up some gains, as the U.S. dollar DXY, -0.01% was flat across the board. Gold GCZ7, +0.17% settled up 0.8% to $1,290.10 an ounce, trading at a roughly two-month high.
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Oil prices CLU7, +0.08% settled down 2% at $48.59 a barrel even with the decline in U.S. inventories as data from the Organization of the Petroleum Exporting Countries showed a further rise in crude-oil production in July.
Asian markets ADOW, -0.22% finished lower on Thursday, with losses of over 1% for the Hong Kong Hang Seng Index HSI, -1.13% European stocks SXXP, -1.00% also closed in the red.
—Ryan Vlastelica and Barbara Kollmeyer contributed to this article