Korean tensions keep yen near eight-week highs

12 August, 2017, 22:46 | Author: Leticia Walters
  • Korean tensions keep yen near eight-week highs

Mike van Dulken, head of research at Accendo Markets, said: "Equities are nursing losses thanks to an unwelcome escalation in geopolitical tensions between the United States and North Korea, both trading nuclear threats that have awoken volatility from its slumber and seen risk assets shunned in favour of the traditional safe havens".

CURRENCIES: The euro was down 0.1 percent at $1.175 while the dollar fell 0.6 percent to 109.68 yen.

Efforts by the U.S. to dial down rhetoric have failed to shift the bearish mood among investors.

Asian equities were back in the red, snuffing out a nascent recovery as spiralling tensions over North Korea lingered for a second day.

Late Tuesday, North Korea had said it was considering plans to fire missiles at Guam, a US territory, after Trump's warning earlier in the day.

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. The index is bouncing off its lowest closing level in six months.

JITTERS: With President Donald Trump warning North Korea of "fire and fury", investors have become concerned that the war of words between Washington and Pyongyang could spiral out of control.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.6 percent in its third session of declines, heading for a 1.5 percent drop for the week. Eastern time. The Dow Jones industrial average slid 52 points, or 0.2 percent, to 22,032.

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.

"The markets are looking for direction after Wednesday's sharp moves and geopolitical concerns will dominate investor mindsets in the coming days", said Esther Maria Reichelt, an FX strategist at Commerzbank in Frankfurt. MetLife fell 75 cents, or 1.6 percent, to $47.56, while Charles Schwab slid 69 cents, or 1.6 percent, to $41.33.

The U.S. bank argued that Switzerland's asset management industry, which has held huge inflows in francs since the euro zone's debt crisis took hold in 2010, would finally begin to reduce its franc position in the months ahead.

South Korea's KOSPI fell 1.7 per cent on Friday to its lowest since May 24, but its losses for the week were a relatively modest 3.2 per cent.

MARKETS OVERSEAS: In Europe, Germany's DAX was down 1.1 percent, while France's CAC 40 fell 1.4 percent. Spot gold was up 0.1% at $1,287 per ounce by 2.17pm GMT, set for its biggest weekly gain since April. Palladium added 0.4% to $899.80 per ounce and was on track to end the week about 2% higher.

"There are four more (inflation) prints between now and the December FOMC meeting and we expect the Fed to remain data-dependent, if a touch more cautious", TD Securities said in a research note. "So we're not going to get to a year-over-year number of 2-percent until some of these very low readings drop out of the statistics 6 to 10 months from now". They were at 2.201 percent on Friday.

US crude shed 20 cents to $48.97 a barrel, while Brent crude fell 26 cents to $51.88 a barrel.

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