North Korea standoff wipes $1trn off global stocks

Remigio Civitarese
Agosto 13, 2017

North Korea responded to the threat with a promise to land missiles near the US Pacific territory of Guam.

With the tense mood pushing European shares down for a third day and Wall Street set to fall again, global stocks were on course for their worst week since Donald Trump won November's USA presidential election.

With Japanese markets closed for a public holiday, Hong Kong led the downward charge in Asia-Pacific as the Hang Seng lost more than two percent.

The yen is often sought in times of geopolitical tension, partly because Japan has a big current account surplus.

Many markets have recently climbed to record or multi-year highs, leaving them vulnerable to a sell-off.

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"Of course, it's all come at a time when share markets are due for a correction, so North Korea has provided a flawless trigger".

The pan-European FTSEurofirst 300 index lost 1.01 percent and MSCI's gauge of stocks across the globe shed 0.26 percent for a weekly loss of 1.6 percent, the largest since the week to November 4.

The Korean won also continued to skid, down 0.45 percent to 1,147.2, falling below its 200-day moving average for the first time in a month.

Japanese markets were closed for a holiday but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe was on track to post its largest weekly drop since the week before Donald Trump won the USA presidential election in November. US -traded Nikkei futures (NKc1) fell 2 percent to their lowest since mid-May.

Emerging market stocks lost 1.27 percent.

Analysts warned the softening dollar could test June's low of 108.82 yen and even the 2017 trough of 108.13 yen.

The Swiss franc, the other traditional safety-play among currencies, has benefited too.

The dollar was further weighed down on Friday by the soft United States inflation data.

Benchmark US 10-year notes last rose 6/32 in price to yield 2.1905 per cent, from 2.211 per cent late on Thursday.

The Korean won continued to fall versus the dollar, down 0.13 per cent to 1,143.5 on Friday for a 1.6 per cent decline on the week. This week has seen its biggest rise since June 2016.

Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in USA crude inventories, leaving prices volatile.

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. Palladium added 0.4% to $899.80 per ounce and was on track to end the week about 2% higher.

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