US stocks' direction dependent on Korean tensions, retail sales

STOCKS fell last week and major indexes beat their biggest weekly retreat since March as a bellicose slanging match between US President Donald Trump and North Korean President Kim Jong Un sent investors fleeing for safe havens.

Stocks could rebound this week if the rhetoric dies down and if retail sales reports are an improvement on early signs from department stores.

It was a game of rhetoric tennis that was reminiscent of the Cold War. In reportedly improvised language, Mr Trump started the week by warning the North Koreans that any further threats would bring "fire and fury" from the Americans. The North Koreans lost no time in issuing another threat, warning that the nation could bomb the American territory of Guam in the Pacific. Mr Trump took the bait and, drowning out more conciliatory language from Secretary of State Rex Tillerson, announced that his "fire and fury" comment may have been an understatement. While foreign policy wonks said the exchanges amounted to little more than hot air, and some stockmarket analysts noted that the 3 per cent retreat from the Standard & Poor's 500 was hardly apocalyptic, there's no doubt that traders took notice.