Finance

Dollar slumps, Tokyo tanks as North Korea tensions spike

Dollar slumps, Tokyo tanks as North Korea tensions spike

In other words, investors are dumping stocks and buying bonds, which many view as a safe haven in times of turmoil.

Gold prices rose early Wednesday amid rising tensions between the United States and North Korea after the latter responded to warnings from US President Donald Trump with a threat to strike the US Pacific territory of Guam.

"This situation is beginning to develop into this generation's Cuban Missile crisis moment, with recent leaked intelligence reports alleging that North Korea now has miniaturised its nuclear warheads, which extends the range of its missiles, and potentially brings USA targets into reach", ING's chief Asia economist Robert Carnell said in a research note on Friday.

Japanese markets were closed for a holiday but the yen powered on, hitting an eight-week high of 108.91 yen to the dollar, adding to its biggest weekly gain since May.

Chinese bluechips lost 1.6 percent, while Hong Kong's Hang Seng was 1.9 percent lower.

The dollar index, which tracks the greenback against a basket of six major rivals, was almost flat on the day at 93.646, remaining above last week's 15-month low of 92.548.

However, U.S. stocks recovered temporarily late on Wednesday as investors appeared to brush off the geopolitical concerns following encouraging comments from Secretary of State Rex Tillerson.

Spot gold prices were little changed at $1,286.05 an ounce, after touching a two-month high earlier.

"We take comfort that numerous smaller markets are growing strongly, offsetting declines in the key markets Italy, Russia (weather impact) and Nigeria (price increases)", they added.

The announcement Thursday warned that the North is preparing a plan to fire four of its Hwasong-12 missiles over Japan and into waters around the tiny island, which hosts 7,000 USA military personnel on two main bases and has a population of 160,000.

Cambodia Says Southeast Asian Nations Unhappy Over North Korea's Missile Tests
The statement was issued a day after the meeting of the 27 members of the major regional security forum in Manila. Suzanne DiMaggio of the New America Foundation think tank in Washington said there may be some room for dialogue.

The dollar dipped against the yen in Asia on Friday as rhetoric between Pyongyang and Washington continues to escalate over calls for North Korea to abandon its nuclear and missile programs. By 2.50pm, it was trading down 0.1%.

"This situation is beginning to develop into this generation's Cuban Missile crisis moment", ING's chief Asia economist Robert Carnell wrote in a note.

The broad-based S&P 500 fell less than 0.1 per cent at end at 2,474.02, while the tech-rich Nasdaq Composite Index dropped 0.3 per cent to 6,352.33. -North Korea tension also weighed on the Canadian dollar, which weakened against its USA counterpart, despite higher oil prices and stronger-than-expected domestic housing data.

The Russell 2000 index of smaller-company stocks picked up 1.69 points, or 0.1 percent, to 1,374.23.

U.S. equities had been on track for a 10th-straight record session Tuesday and the dollar was initially up after the JOLTS survey showed job openings hit a record in the USA last month.

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.

The Federal Reserve's hint about unwinding balance sheets, the possibility of the European Central Bank tapering stimulus and the looming debate about the US debt ceiling in the fall challenge the market's recent performance, Mr. Baele said.

Twenty-First Century Fox Inc was down 2.65 percent following quarterly revenue that fell short of expectations.

Global benchmark Brent also fell 0.9 per cent to $51.44, after Thursday's 1.5 per cent drop.

US crude was down 0.9 percent at $48.16 per barrel, on track for a weekly loss of 2.9 percent.


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