Investors looked for cover after strong words by President Trump causing Japan’s Nikkei to drop Eugene Hoshiko AP
14 August, 2017, 00:04
U.S. President Donald Trump's warning North Korea faced "fire and fury" and Pyongyang's threat of possible retaliation drove investors out of stocks and into the yen, Swiss franc, gold and government debt. "Risk aversion is still very much a concern for markets", said Shaun Osborne, chief currency strategist at Scotiabank in Toronto. It is heading for a 2.5% drop for the week.
"What has changed this time is that the scary threats and war of words between the US and North Korea have intensified to the point that markets can't ignore it", said Shane Oliver, head of investment strategy at AMP Capital in Sydney.
Gold, another classic safe haven asset, was trading at around $1,285 per ounce, up more than two percent this week and near a nine-week high.
The Standard & Poor's 500 index fell 35 points, or 1.4 percent, to 2,438, its biggest drop since mid-May. United States gold futures for December delivery rose 0.5% to $1,285 per ounce.
The market also awaited U.S. consumer inflation data on Friday that would offer more clues about the pace of the U.S. Federal Reserve's monetary tightening.
Emerging market stocks lost 1.27 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.47 per cent lower.
The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors there will repatriate funds should a crisis materialize.
The CBOE Volatility Index, the most widely followed barometer of expected near-term stock market volatility, ended at a session low of 11.11 after rising as high as 12.63.
In Australia, the S&P/ASX 200 added 0.21%. MetLife fell 75 cents, or 1.6 percent, to $47.56, while Charles Schwab slid 69 cents, or 1.6 percent, to $41.33. The dollar index, which measures its strength against a basket of currencies, was roughly flat at 93.420.
The dollar was further weighed Friday by the soft USA inflation data.
The franc reversed a two-week losing streak and gained 1.1% to as firm as 0.9611 per dollar.
In a note sent to clients late on Thursday, the US bank predicted the single currency would rise to $1.25 in the first quarter of next year and reach parity with sterling for the first time.
Despite today's jump, gold still sits well below its 52-week high of over $1,350 per ounce, which it reached last summer.
USA producer prices unexpectedly recorded their biggest drop in almost a year, and the number of Americans filing for unemployment benefits unexpectedly rose last week.
Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in USA crude inventories, leaving prices volatile. Brent crude, used to price global oils, gave up 22 cents to $51.92 in London.
OTTAWA-A pastor in ontario, who was serving a sentence of life in prison in North Korea finally returned to the country Saturday. Lim's release was intended as a goodwill message, to try to portray itself as a country capable of reasonable negotiation.
Authorities say the death toll could go up as more people are missing in floods in the eastern Tarai. Severe monsoon flooding and landslides killed almost two dozen people in eastern Nepal on Saturday.
Dillard's slumped 13.8 per cent after the chain booked a loss for the second quarter as increased inventory led to big discounts. While the German DAX Index has edged down by 0.1%, the French CAC 40 Index and the UK's FTSE 100 Index are both down by 1%.
Addressing reporters, Trump refused to name white supremacists or any specific group, blaming the violence "on many sides". Charlottesville Police identified the driver as 20-year-old James Alex Fields Jr . of Ohio.
The two discussed responses to North Korean provocations and the security situation on the Korean peninsula, he said. Trump has said he would not allow Pyongyang to develop a nuclear weapon capable of hitting the United States.
At present, Seoul is allowed to possess ballistic missiles with a range of 800 kilometres and payload of 500 kilogrammes. The US military has a huge footprint across south-east Asia and the Pacific, particularly in Japan and South Korea.
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The group also reported vandalism to "Hate Has No Home Here" signs that were put up in yards throughout the neighborhood. The driver has been identified as James Alex Fields, 20, of OH , according to CNN .
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The case of American student Otto Warmbier, who died following his release from North Korea, was included in those talks. Earlier this week, Trump said if North Korea made any more threats to the USA , it will be met with " fire and fury ".
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President Donald Trump warned North Korea earlier this week it would face " fire and fury " if it threatened the United States . Trump's second warning, however, has shaken markets that have been largely resilient this year, swatting away a slew of risks.
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