North Korea tensions send dollar to eight-week low vs yen

Xavier Trudeau
Août 13, 2017

The Dow Jones industrial average closed up 14 points, a gain of 0.07 percent, the Nasdaq composite rose almost 40 points or 0.64 percent and the S&P 500 gained 3 points or 0.13 percent. The Nasdaq Composite Index rose 10 points to 6,225, a rise of 0.2%.

Global stock markets ended their worst week in months amid rising tensions between the USA and North Korea, though US stock indexes steadied on Friday to close up slightly.

The Swiss franc and the yen notched big gains against the dollar on Wednesday after U.S. President Donald Trump warned North Korea that it would face "fire and fury" if it threatened the United States. "Therefore one shouldn't make a big call". The S&P is looking at a drop of 1.4%, its worst week since March.

NYSE declining issues outnumbered advancers 1.73-to-1; on Nasdaq, a 1.47-to-1 ratio favored decliners. That's the highest level of job openings on record according to JOLTS.

Blue Apron slumped as much as 19.1 percent to a record low after the meal-kit delivery service provider reported a bigger-than-expected loss in its first quarterly report as a public company. Gold has rallied 2.6% this week, while the 10-year Treasury yield touched a six-week low of 2.1%. But was retreating in recent trade.

On Thursday, in response to North Korea's threat to fire missiles at American targets in the Pacific, President Trump said that if Pyongyang "does something in Guam, it will be an event the likes of which nobody has seen before - what will happen in North Korea". Is that a reason to be?

The dollar was up 0.05 percent to 109.25 yen, after earlier falling to a sixteen-week low following data showing US consumer prices rose less than expected in July.

Adding to the modest losses posted in the two previous sessions, stocks moved sharply lower over the course of the trading day on Thursday.

Financial stocks underperformed after U.S. Treasury yields fell as bond prices rose in Wednesday's flight to safety.

MSCI's main index of Asia-Pacific shares, excluding Japan, was last down 0.6 per cent.

"This selloff could be more than just a North Korea induced blip on the screen", Peter Boockvar, chief market analyst at The Lindsey Group, wrote in a report on Friday. They outweighed gains in health care stocks and elsewhere.

US stock futures were marginally softer on Friday.

TOUGH TALK: Tensions between the US and North Korea continued to simmer early Friday.

An editorial in China's state-run Global Times (http://www.globaltimes.cn/content/1060791.shtml), published late Thursday local time, added to the pressure on Asian markets. They suggest the US and China, a North Korean ally, could work together to de-escalate the situation.

ASIA'S DAY: The earlier Asian session was heavily influenced by the sabre-rattling between the US and North Korea.

On the Fed speaker list, Minneapolis Fed President Neel Kashkari is expected to speak in a question-and-answer session at the Independent Community Bankers of Minnesota Annual Convention at 11:30 a.m.

Oanda analyst Craig Erlam said: "Risk aversion is once again the name of the game.as geopolitical tensions mount and investors head for cover in the traditional safe havens".

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