Stocks, dollar extend slide as US, North Korea tensions intensify

Stocks, dollar extend slide as US, North Korea tensions intensify

Stocks, dollar extend slide as US, North Korea tensions intensify

USA stocks posted a weekly loss despite closing in positive on Friday, as ongoing US and North Korea tensions limited gains while inflation data for July fell short of expectations, lessening the case for a third rate hike later this year.

With Japanese markets closed for a public holiday, Hong Kong led the downward charge in Asia-Pacific as the Hang Seng lost more than two percent.

"What has changed this time is that the scary threats and war of words between the USA 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. The kiwi was 0.79 percent lower against the greenback after New Zealand's central bank said it was slightly more uncomfortable with the high level of the local dollar than it had been in May.

The dollar index, which tracks the greenback against six rival currencies, was down 0.17 percent to 93.391.

The Swiss franc and the yen notched big gains against the dollar on Wednesday after US President Donald Trump warned North Korea that it would face "fire and fury" if it threatened the United States.

"We're still close to the all-time high so that makes people a little nervous too, so they might say now might be the time to take a little bit of money off the table".

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.

The dollar widened losses against the yen to hit a two-month low.

The Labor Department said on Friday the Consumer Price Index (CPI) edged up 0.1% last month after being unchanged in June.

Wall St set to open flat after inflation data, N.Korea tensions
Wall Street saw a stock sell-off on Thursday as rising tensions between the US and North Korea filled investors with worry. Priceline Group slumped 6.5 percent after issuing a profit forecast that was weaker than analysts were expecting.

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 will repatriate funds should a crisis materialize.

But "the yen may be expected to lose its safe haven status if U.S".

Gold got an extra boost after data showed U.S. consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

For now, the dollar remained on the back foot, pulling back 0.1 percent to 0.9635 Swiss francs on Friday, after dropping as much as 1.2 percent to a two-week low overnight.

The dollar was further weighed down on Friday by the soft US inflation data.

US producer prices unexpectedly recorded their biggest drop in almost a year, and the number of Americans filing for unemployment benefits unexpectedly rose last week. This week has seen its biggest rise since June 2016.

Spot gold inched down 0.1 percent to $1,284.64 per ounce as of 0616 GMT, but was set for a weekly gain of over 2 percent.

Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in US crude inventories, leaving prices volatile.

Global benchmark Brent also fell 0.9 percent to $51.44, after Thursday's 1.5 percent drop. It is poised to end the week down 1.9 percent.

Related news