Investors seek safety as North Korea tension escalates; stocks end off lows

Investors seek safety as North Korea tension escalates; stocks end off lows

On the economic front, data is expected to show that US consumer prices likely rose in July after being unchanged the prior month.

There were falls of almost 2% on South Korea's Kospi and Hong Kong's Hang Seng, with markets in mainland China and Australia also down - taking their cues from sharp losses on Wall Street earlier. The CBOE Volatility Index, known as Wall Street's "fear gauge", rose to its highest level of the year.

"Geopolitical tensions are the key driving force this morning, boosting demand for safe havens", TD Securities analysts said in a note. The fall of the S&P 500 has been higher, at 1.5 %, most felt still for the Nasdaq, technology stocks losing 2.1% on the session.

In Toronto, the composite index S&P/TSX has lost 143,08 points, or 0.9 %, to close at 15 074,25 points, the decline being nearly generalized to all sectors.

Geopolitical tension persisted after a North Korean army commander said "sound dialogue is not possible" with U.S. President DonaldTrump and "only absolute force can work on him", according to state media.

The dollar index fell 0.32 per cent, with the euro up 0.42 per cent to US$1.1819.

Normally, in times of high risk, we find that the stock markets crash as the funds tend to get pulled out of it.

While the Russell 2000 index ended up 0.1 percent on the day, it was more than 5 percent below its July 25 record close and for the week it fell 2.7 percent, its biggest weekly drop since February 2016.

The influential financial stocks were among the biggest drags on the index, with Royal Bank of Canada down 1.5 percent to C$92.88, and Manulife Financial Corp falling 4.7 per cent to C$24.43, its largest drop since early August past year. "Risk aversion is still very much a concern for markets", said Shaun Osborne, chief currency strategist, at Scotiabank in Toronto.

"The escalation of the geopolitical situation between the US and North Korea is beginning to rattle investors' nerves as was witnessed in the VIX index yesterday", said Peter Cardillo, chief market economist at First Standard Financial. On the Nasdaq, 1,462 issues rose and 1,227 fell.

It was 0.2 percent lower at 1.1310 francs, compared with highs of 1.1537 francs hit a week ago.

Trump suggested in remarks on Thursday that his comments threatening North Korea with "fire and fury" may not have been tough enough.

Japanese markets were closed for a holiday but the yen powered on, hitting an eight-week high of 108.91 yen to the dollar, adding to its biggest weekly gain since May.

Disney shares fell sharply on Wednesday -3.88% weighing on the big board after the company reported a mixed third quarter financial performance and news about going head to head with other streaming services such as Netflix, Amazon and Hulu.

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