North Korea standoff wipes $1trn off global stocks
13 Августа 2017, 04:23 | Opal Carroll
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"The level of risk aversion we're seeing suggests traders still believe the prospect of military action is very small but precautions are still being taken nonetheless, as this still has the potential to escalate very quickly and unexpectedly".
Japanese markets were closed for a holiday, but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe .miwd00000pus was on track to post its largest weekly drop since the week before Donald Trump won the US presidential election in November. It had gained about 3% for the week so far.
Simmering tensions between the United States and North Korea have come back to the boil in recent days after Pyongyang disclosed plans to fire missiles over Japan to land near America's Pacific territory of Guam.
"I will tell you this, North Korea better get their act together or they're going to be in trouble like few nations ever have been in trouble in this world", Trump said.
Apart from geopolitical worries, some technical analysts like Tom McClellan, editor of the McClellan Market Report, blamed seasonality for this week's retreat given August's record as a weak month for stocks.
Shares of Snapchat parent Snap Inc.(SNAP) slid 14% a day after the company's earnings missed forecasts (http://www.marketwatch.com/story/snap-ceos-promise-cant-overcome-declining-ad-rates-stock-heads-toward-new-lows-after-earnings-2017-08-10), and the social-messaging company disclosed that average ad prices fell in the second quarter.
South Korea's fell 1.7 percent to its lowest since May 24, but its losses for the week are a relatively modest 3.2 percent.
A Reuters Datastream index of more than 7,000 stocks across the globe saw its market capitalization drop from a record high $61.36 trillion on Monday to $60.43 trillion at the close on Thursday.
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.
European markets also slid in early trade after Wall Street indices suffered their biggest losses in almost three months Thursday, while the dollar struggled to recover from eight-week lows below 109 yen as investors fled to safe haven assets.
Copper traded at $2.912, down 0.25%, while natural gas tacked on 0.23% to $2.991.
Investors also drew some encouragement from new government data showing USA inflation at the consumer level inched higher last month. The Federal Reserve is likely to scale back on its expected pace of interest rate hikes if inflation continues to be soft.
The dollar slipped to 109.04 yen from 109.26 late Thursday.
In bond markets, the yield on US Treasuries fell, also pressured by the lowered expectations for a Fed move.
"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", said TD Securities in a research note.
The 30-year bond last rose 6/32 in price to yield 2.7847 percent, from 2.794 percent late on Thursday.
Spot gold inched down 0.1 percent to $1,284.64 per ounce as of 0616 GMT, but was set for a weekly gain of over 2 percent. It was on course for a weekly rise of about 5%, the biggest such gain since July 2016.
Benchmark U.S. crude rose 23 cents to settle at $48.82 a barrel on the on the New York Mercantile Exchange.
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