Asia stocks, US$ extend slide as US-North Korea tensions intensify

Gladys Abbott
August 12, 2017

Japanese markets were closed for a holiday, but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe .miwd00000pus was on track to post its largest weekly drop since the week before Donald Trump won the US presidential election in November.

Many markets had already been at record or multi-year highs after an extended rally, leaving them vulnerable to a sell-off.

North Korea warned foreign diplomats to leave Pyongyang in 2013 when it suspended work at a joint inter-Korean industrial park and threatened missile strikes on U.S. Pacific bases, notably in Guam and Hawaii.

And several high-profile investors like Ray Dalio and Jeff Gundlach offered buzzkills by suggesting that the second-longest bull market in history at least needs to take a breather.

The Dow fell more than 200 points, a almost 1% drop, and its biggest dip in three months. The Dow is up 34.62 points or 0.2 percent at 21,878.63, the Nasdaq is up 25.62 points or 0.4 percent at 6,242.49 and the S&P 500 is up 4.36 points or 0.2 percent at 2,442.57.

While the German DAX Index closed just below the unchanged line, the U.K.'s FTSE 100 Index and the French CAC 40 Index both tumbled by 1.1 percent. Or are people using these geopolitical concerns as an excuse to take money out of the market -- tech stocks in particular?

Despite the past week's decline, the major indexes are in positive territory so far this year, led by the Nasdaq, which is up 16.2 percent.

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The North Korea situation isn't the only thing weighing on stocks.

In overseas trading, stock markets across the Asia-Pacific region saw continued weakness during trading on Friday. SPDR Gold Shares (GLD), which tracks gold bullion prices, climbed 0.74%. It's still the highest it's been since May.

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

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.

Emerging market stocks lost 1.20 percent. "Should we see another dip in inflation in July, it could make the job of building a consensus for another rate hike this year more hard". But some economists say the Fed may stand pat for the rest of 2017 unless inflation accelerates in coming months.

Benchmark U.S. crude rose 23 cents to settle at $48.82 a barrel on the on the New York Mercantile Exchange.

But then oil prices succumbed to the overall selling pressure for risky assets, aided by an OPEC report showing crude production by cartel members increased slightly in July, including Saudi Arabia, which had championed efforts by the organization and its allies to extend an output freeze.

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