Wall Street rises on inflation data but on track for weekly losses

13 August, 2017, 21:18 | Author: Leticia Walters
  • Stocks, dollar extend slide as US, North Korea tensions intensify

LONDON, Aug 11 (Reuters) - The dollar was pinned close to an eight-week low against the yen on Friday as escalating tension over North Korea dominated currency markets thinned out by the summer holidays in Europe and the United States. For now, Wall Street watchers seem doubtful that's in the cards. The Nasdaq composite lost 36 points, or 0.6 percent, to 6,315.

The Swiss franc, by contrast, was on track for its biggest single-day rise in more than 2 1/2 years.

"The typical text book trade is that investors rush for safe havens".

But the yen added to an already-strong weekly rally of close to 1.5 percent, hitting its highest in nearly four months versus the dollar at 108.73 yen. "The war of words between the leaders of the US and North Korea continues to dominate investor sentiment", said Forex.com technical analyst Fawad Razaqzada. Thursday's producer-price index came out tepid, analysts said. Gold miners bucked the 1.3 per cent fall for Australia's benchmark index.

South Korea's KOSPI fell 1.7 percent to its lowest since May 24, but its losses for the week are a relatively modest 3.2 percent.

The Dow Jones industrial average fell 36 points, or 0.2 percent, to 22,048.

It stood 0.16 percent down on the day at 109.03 yen per dollar by 1047 GMT. Chinese blue chips.CSI300 closed flat but Hong Kong's Hang Seng fell 0.4 percent.HSI.

Gold is considered a safe haven asset in times of uncertainty.

The Swiss franc reversed a two-week losing streak and gained 1.1 percent to 0.9611 per dollar CHF=.

Mining shares were among biggest the decliners as investors shunned assets seen as more risky.

"Heightened geopolitical risks overnight have seen the markets flip from risk-on to risk-off and we have to wait and see how long this move runs before adding some positions", said Viraj Patel, an FX strategist at ING in London.

"Where the current tensions escalate sharply, we would expect an acceleration of this week's price action, i.e. a sharp rise in risk premiums across asset classes, substantial falls in United States and German government bonds yields, significant JPY and CHF strength and a massive sell-off in equities, particularly in Europe which is more linked into the global cycle".

The euro, which hit its highest since the start of 2015 on August 2, dipped 0.1 percent to $1.1761 in morning trade in Europe.

Yields on core government debt fell.

Nasdaq 100 e-minis were down 17 points, or 0.29 percent, on volume of 36,232 contracts.

"It's awesome when you consider the headlines just how calm the equity markets are, how they've taken things in their stride", said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. USA -traded Nikkei futures fell 2 percent to their lowest since mid-May.

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