Economy

Futures lower as N.Korea tensions extend to third day

Futures lower as N.Korea tensions extend to third day”

The Swiss franc and Japanese yen are often sought in times of geopolitical tension or global financial stress, partly because both countries have big current account surpluses.

Trump warned North Korea again on Thursday not to strike Guam or U.S. allies, saying his earlier threat to unleash "fire and fury" on Pyongyang if it launched an attack may not have been tough enough.

South Korea's KOSPI fell 1.8 percent to a 9 1/2-week low, taking its losses this week to almost 2.7 percent.

"What has changed this time is that the scary threats and war of words between the USA and North Korea have intensified to the point that markets can't ignore it", said Shane Oliver, head of investment strategy at AMP Capital in Sydney.

Japanese markets were closed for a holiday but the in-demand yen powered on, hitting an eight-week high of 108.91 yen to the dollar, adding to its biggest weekly gain since May. 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 dollar index .DXY , which measures the US currency against a basket of other major currencies, fell 0.14 percent.

US stocks closed lower on Tuesday after Trump's vow to respond aggressively to any North Korean threats triggered a late afternoon selling spree.

But analysts said equities had also fallen as investors took profits.

Meanwhile, gold demand in India remained sluggish this week as local prices jumped to their highest level in almost three months and a rally in global prices dampened fresh buying elsewhere in Asia.

Rising tensions between North Korea and the United States were once again the theme of the day with only the release of much-awaited inflation figures out of the U.S. managing to divert attention away from developments on that front.

"Given the great run we've had, seems like some sort of pullback wouldn't be surprising", said Michael Baele, managing director of investments at U.S. Bank Private Wealth Management.

Still, he said, "the Washington, D.C., bedlam and North Korea's saber-rattling is muddying the broader landscape".

Sterling slipped below $1.30, close to a two-and-a-half-week low but it strengthened against the euro by 0.2%, following Tuesday's 10-month low.

The dollar index .DXY , which tracks the greenback against six rival currencies, was down 0.12 percent to 93.53, after rising as high as 93.888 earlier in the session.

On the currency markets, the pound was up 0.03% against the dollar at $1.2981 but down 0.23% against the euro at 1.0999 euros.

The yield on the benchmark 10-year Treasury fell as low as 2.197 percent, its lowest level since June 28, before inching back to 2.201 percent. "North Korean tensions continue to escalate", leaving the Swiss Franc, and possibly the US dollar, as the remaining beneficiaries of risk aversion, Emmanuel Ng, currency strategist at OCBC Bank in Singapore, wrote in a note.

Helping offset the geopolitical tensions was weaker-than-expected consumer price data for July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

Markets are now awaiting USA consumer price data for July, due later in the session.

S&P 500 e-minis were up 1.5 points, or 0.06 percent, with 300,073 contracts traded.

The data comes amid tepid inflation that has remained below the Fed's 2 percent target, despite low unemployment. It is heading for a 2.5 percent drop for the week. It is poised to end the week down 1.7 percent.

U.S. crude oil crude futures edged up 10 cents to United States dollars 48.69 per barrel.



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