Stocks lower, safe-haven assets higher amid US-North Korea tensions

Stocks lower, safe-haven assets higher amid US-North Korea tensions

The markets are poised for any commentary from the President and Washington regarding North Korea's threat to attack the United States territory of Guam.

London's benchmark FTSE 100 index fell back 1.1 percent to 7,415.78 points, driven by losses in the commodity sector. The consumer discretionary index .SPLRCD was one of its biggest losers with a 0.47 percent drop. Japan was closed on a public holiday.

World equity markets were lower Friday on the back of simmering tensions between the United States and North Korea, but firmer prices on Wall Street helped put a floor under the losses in Europe, dealers said.

THE QUOTE: "Inflation - or lack of -- has been an ongoing problem for the central bank and some policy makers have voiced concerns about this in recent months as they consider whether to raise interest rates again this year", said Craig Erlam, senior market analyst at OANDA.

"When investors are optimistic to the extreme, it means that most of their money is already in the market and there's no more money coming in", Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida.

Indeed, Trump added that his warning may not have been "tough enough" and declined to take the option of a pre-emptive strike off the table. Hong Kong's Hang Seng Index plunged by 2 percent, while South Korea's Kospi Index slumped by 1.7 percent. The Russell 2000 index of smaller-company stocks gave up 10 points, or 0.8 percent, to 1,399. We would expect USA defence companies to also fair well on Wednesday with Lockheed Martin, Boeing and Northrup Gruman potential gainers from the escalating geopolitical situation with North Korea.

USA stocks closed lower on Tuesday after Trump's comments sparked a late afternoon selling.

The so-called "fear gauge", the CBOE Volatility Index (the "Vix") hit its highest level on Friday since the day of the United States presidential election, but has since retreated to 15.09, down 5.9% on the day.

On August 8, the S&P 500 started the day lower, rose to fresh highs, and closed below the opening levels.

USA stock futures ESc1 were marginally softer on Friday.

The US dollar was down 0.77 per cent against the yen at 109.21 yen. The precious metal is usually seen as a safe port in times of geopolitical uncertainty. "Profit-taking as opposed to a deeper retreat", said Stephen Innes, head of trading in Asia-Pacific for OANDA in Singapore.

Weakness in US Treasury yields may also be supporting the yen, Mr Sweeting said.

Silver gained 47 cents, or 2.9 percent, to $16.86 an ounce. Gold rose as much as 1.2 percent to a near two-month high, while the Swiss franc was on track to post its biggest single day rise in about two-and-a-half years.

Economic data showed US worker productivity rose more than expected in the second quarter but the trend remained weak.

While gold, a safe-haven favorite, pared some gains, it was last up 1.2 percent, at around its highest since mid-June.

USA crude oil crude futures CLc1 were little changed at $48.59 per barrel. Netflix also fell, giving up $4.57, or 2.6 percent, to $173.79.

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