Stocks tumble on North Korea worries

Stocks tumble on North Korea worries

Gold got an extra boost after data showed U.S. consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

Reuters data show a 22 per cent perceived chance for a rate hike after the Fed's December meeting.

The index ended up 4.93 points at 16.04, the highest level since November 8, when Trump was elected president. In a tweet, President Donald Trump warned of military action "should North Korea act unwisely", noting that the U.S.is "locked and loaded".

Trump suggested in remarks on Thursday that his comments threatening North Korea with "fire and fury" may not have been tough enough.

A Reuters Datastream index of more than 7,000 stocks across the globe saw its market capitalisation drop from a record high US$61.36 trillion on Monday to US$60.43 trillion at the close on Thursday.

The S&P 500 has hadn't a single day move of more than 0.5 percent since mid-July and has fallen more than 1 percent only twice this year. The Shanghai Composite Index lost 0.2 percent to 3,275.57 and Hong Kong's Hang Seng was off 0.3 percent at 27,757.09.

The decline was broad, with all the 11 major S&P indexes lower.

South Korea's KOSPI fell 1.3 percent, taking its losses this week to almost 2.7 percent.

"Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay.

Many world stock markets have hit record or multiyear highs in recent weeks, leaving them vulnerable to a sell-off, and the tensions over North Korea proved to be the trigger.

Gold Price Hits Highest Levels In Two Months
As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 2.192%. ECONOMY: Employers posted a record number of open jobs in June while a survey of small businesses showed optimism improving.

Until this week, the equity market had managed to shake off negative news, including previous saber-rattling over North Korea and failures in Washington to pass high-profile bills, such as repealing and replacing Obamacare.

And in a textbook-type cross-asset move toward safety in times of trouble, the Japanese yen hit an eight-week high against the US dollar while spot gold also reached a two-month high.

Japan is the world's biggest creditor nation and there is an assumption Japanese investors may repatriate their foreign holdings in times of heightened global uncertainty.

The Korean won also continued to skid, sliding 0.4 percent to 1,146.2, below its 200-day moving average.

The euro was down 0.4 per cent at just over $1.17 and nearing a two-week low, while the New Zealand dollar tumbled a full one per cent as its central bank head bluntly said he wanted it lower. "If you look at the gold price after the CPI (inflation) data, it tells you that the Fed is not going to be in any rush to increase the interest rate this year", said Naeem Aslam, chief market analyst at Think Markets.

In Europe, France's CAC 40 fell 1.6 percent to 5,135 while Germany's DAX was down 1.3 percent at 12,133. The S&P is looking at a decline of 1.3%, its worst week since March.

U.S. Treasury long-dated yields dropped to six-week lows, pressured by U.S.

Benchmark 10-year notes last rose 7/32 in price to yield 2.1888 percent, from 2.211 percent late on Thursday.

The dollar was down 1.2 percent at 0.9627 Swiss francs, while an ounce of gold was 1 percent higher at $1,275. US gold futures gained 0.50 percent to $1,296.60 an ounce.

Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in USA crude inventories, leaving prices volatile. Brent crude, used to price worldwide oils, gained 40 cents to $52.54 in London.

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