Published: Mon, August 14, 2017
Markets | By Noel Gibbs

Asian shares, United States stock futures, dollar slip on rising Korean tensions

Asian shares, United States stock futures, dollar slip on rising Korean tensions

The Nasdaq Composite was up 19.35 points, or 0.31 percent, at 6,236.22.

The S&P 500 Index (SPX - 2,474.02) lost 0.9 point, or 0.04%.

"If the data continues to come in on the softer side, the market might start to price the Fed staying on hold this year", said Sireen Harajli, FX strategist at Mizuho in NY. Is that a reason to be?

Earlier on Thursday, North Korea revealed a plan to launch ballistic missiles toward a major USA military hub in the Pacific.

However, an Associated Press report that the USA and North Korea have been engaged in back channel talks (https://apnews.com/686ac7c761694b28b67793a1d8297145?link=mktw) for several months even as they exchange incendiary threats helped to soothe some of the jitters.

"Gold, one of the first ports of call in times of investor anxiety, is now trading 0.56% higher at US$1268/oz", he said.

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Still, the S&P and the Dow were on track to post their biggest weekly loss in about five months and the Nasdaq on course to post its biggest weekly fall in about six weeks.

U.S. stocks also fell, lingering in negative territory the entire session, but notching smaller declines than in overseas markets.

In overseas trading, stock markets across the Asia-Pacific region saw continued weakness during trading on Friday. -North Korea tension, though some analysts said gains may be overdone.

Eurostoxx volatility, the main European gauge of equity investor anxiety, jumped to a near four-month high, though it remained near historically depressed levels.

Travel companies Priceline.com and TripAdvisor also weighed on markets, with shares falling more than 7%.

Subdued US inflation has stirred doubts about the chances of another Fed interest rate hike this year, weighing on the greenback. Technology and healthcare stocks were among the big gainers. The FTSE 100 index of leading British shares was 0.6 percent lower.

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"What has changed this time is that the scary threats and war of words between the United States 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.

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.

Senate Armed Services Chairman John McCain thought the language might be ill-advised, particularly since carrying out a strike on North Korea could lead to significant destruction in South Korea.

J.C. Penney was down 17 percent after hitting a record low following the retailer's bigger-than-expected quarterly loss.

But "the yen may be expected to lose its safe-haven status if US-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.

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