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North Korea talk drags stocks lower; gold, yen rise

13 August 2017, 03:17 | Austin Hogan

North Korea talk drags stocks lower; gold, yen rise

Asia Shares Dollar slip US stock slip US US-North Korea US-North Korea Tension Market news International market Asia market Latest news World news

Possibly due to the lack of appetite for risk in the market, the euro suffered on Thursday, down slightly against the dollar by 0.09% at 1.1749, slipping towards a two week low. "North Korean tensions continue to escalate", leaving the Swiss Franc, and possibly the US dollar, as the remaining beneficiaries of risk aversion, Emmanuel Ng, currency strategist at OCBC Bank in Singapore, wrote in a note.

Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a sell-off, and the tensions have proved the trigger. They have soared over 2 percent in the previous two sessions, and are set for a weekly gain of 2.25 percent.

The so-called fear gauge - the CBOE Volatility Index (VIX), the most widely followed barometer of expected United States stock market volatility, hit its highest since November 8, when Mr Trump was elected president.

Disappointing economic data releases weighed on both sides of the Atlantic today with a negative goods trade balance for the United Kingdom (-0.1% versus expectations of 1.4%), higher unemployment claims from the U.S. (244,000) and also a negative month-on-month PPI figure for the USA (-0.1%).

In bond markets, the yield in U.S. Treasuries fell, also pressured by the lowered expectations for a Fed move. Spot gold reached a two-month high. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.47 percent lower.

The pan-European FTSEurofirst 300 index lost 1.01 percent and MSCI's gauge of stocks across the globe shed 0.26 percent for a weekly loss of 1.6 percent, the largest since the week to November 4. "Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay.

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Speaking live on state television at a forum for Russian students, Lavrov encouraged Pyongyang and Washington to sign up to a joint Russian-Chinese plan, under which North Korea would freeze its missile tests and the United States and South Korea would impose a moratorium on large-scale military exercises.

"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. It is heading for a 2.5 percent drop for the week.

Crude oil prices tumbled on the back of the selloff on Wall Street and lingering concerns over global oversupply. The euro has weakened against the dollar to last trade at $1.1755. Palladium added 0.4% to $899.80 per ounce and was on track to end the week about 2% higher.

The Korean won also continued to fall, down 0.45 percent to 1,147.2.

The dollar index (.DXY), which measures the USA currency against a basket of other major currencies, fell 0.14 percent.

On Thursday, New York Federal Reserve President William Dudley said he expects sluggish USA inflation to rise over the next several months while the hot labor market gets even hotter.



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