S&P falls 1.4 percent in safety flight on North Korea tensions

S&P falls 1.4 percent in safety flight on North Korea tensions

Wall Street put a floor under global equities on Friday after a weak inflation reading brought investors back into USA stocks even as tensions between the United States and North Korea continued to escalate, though the geopolitical fears still drove safe-haven buying of gold and the yen. The Swiss franc is a traditional safe haven. However, the classic safe-haven asset gold rose again Thursday to around $1,279 an ounce after surging 1.3 percent Wednesday as investors reacted with dismay to the deepening crisis. The Aussie dollar recoiled 0.5 per cent on its USA counterpart to US$0.7872 and touched a three-week trough at one point.

In other precious metal trade, silver futures rose 1.01% to $17.034 while platinum futures rose by 0.36% to $990.15. A slowdown in Chinese fiscal spending (http://www.marketwatch.com/story/chinas-fiscal-spending-growth-slows-2017-08-11) also hit commodities stocks, as the sector is highly exposed to growth and spending on infrastructure projects in China.

Many markets had already been at record or multi-year highs after an extended rally, leaving them vulnerable to a sell-off.

Separately Capital Economics' Simona Gambarini overnight said the recent rise in geopolitical risk could lift the price of gold "beyond $US1350 an ounce", which would be the first time it has topped that level since the UK Brexit referendum in mid 2016.

"There's uncertainty and caution as investors nervously eye the next foreign policy moves".

The dollar slipped to as low as 109.11 yen in early Asian trade on Friday, its lowest level since June 14, when the greenback had fallen to as low as 108.81 yen.

The Dow and S&P 500 inched higher on the day but they both posted their largest weekly percentage drops since late March.

Weakness in U.S. Treasury yields may also be supporting the yen, some analysts said.

"Despite all this, there's no reason to press the panic button".

The tentative gains "suggest that the headline shock value pertaining to the US-North Korea standoff is starting to dissipate, which is to say actual action will now speak much louder than words", said Briefing.com analyst Patrick O'Hare.

In European markets, the French CAC 40 was down 0.7% and Frankfurt's DAX 30 shed 1.2%.

Disney shares closed down 3.9 per cent as investors were skeptical of its plan to launch streaming services rather than rely on Netflix NFLX.O .

Information technology fell 1.24 per cent, hurt by a 16.6 per cent plunge to C$66.50 in Kinaxis Inc stock. Travel-review website operator TripAdvisor was down 2.7 percent.

Retailers Wal-Mart (WMT), Home Depot (HD), Target (TGT), Staples (SPLS), and Gap (GPS) are also among the companies due to report their quarterly results next week.

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