Asian Shares Succumb To Heavy Selling Amid Trump's Rhetoric On N. Korea

Gladys Abbott
August 13, 2017

Stock markets took the brunt of risk-averse trading on Wednesday after an overnight escalation of tensions between the USA and North Korea forced investors into haven assets such as gold, Treasuries and the Swiss franc.

Wall Street stocks dropped early Thursday after North Korea announced a plan to send missiles towards Guam, raising the stakes of a nuclear standoff with the United States.

The broader Topix shed 0.65 point to 1,617.25, while the JPX-Nikkei Index 400 shed 8.16 points, or 0.1 percent, to end at 14,367.56. Brent crude, used to price worldwide oils, added 59 cents to $53.29.

In a statement delivered at his Bedminster, N.J., golf club on Tuesday, Trump said, "North Korea best not make any more threats to the U.S. They will be met with fire and fury like the world has never seen". Japan was closed on a public holiday.

On the currency markets, the pound was down to a three-week low against the U.S. dollar but mainly due to earlier disappointing output and trade data.

US stock-index benchmarks opened slightly higher on Friday, but equities were on pace for its ugliest week in months amid intensifying rhetoric between the USA and North Korea.

CURRENCIES: The dollar slipped to 109.78 yen from 110.06 late Wednesday in Asia.

ANALYST'S TAKE: "The tensions between North Korea and the U.S.is an excuse for profit-taking", Seo Sang Young, an analyst at Kiwoom Securities.

Early in the session, the dollar was supported by a report that showed US job openings surged to a record high in June.

Tensions over North Korea weigh on stocks but boost gold

In Hong Kong, shares ended lower, but developers provided support.

The pan-European FTSEurofirst 300 index.FTEU3 lost 1.11 percent.

Seoul shares hit 11-week low amid selling by foreign investors following Trump's fresh warning to North Korea. Silver rose 1.7% to $16.70 per ounce. "I do think we could see markets pull back between 1 and 5 percent".

Note: U.S crude inventories last week fell by -7.8m barrels, more than expected, but gasoline inventories rose unexpectedly.

In economic news, German consumer inflation grew an annual 1.7% in July, slightly faster than the 1.6% increase registered in June, final data from Destatis showed.

The US Consumer Price Index (CPI) edged up 0.1% last month after staying flat in June and falling by 0.1% in May.

Macy's (M.N) shares closed down 10.2 percent and Kohl's (KSS.N) fell nearly 6 percent as the companies continued to report a drop in quarterly same-store sales, stoking concerns that their turnarounds may still be a long way off.

Dean Foods Co.'s stock plunged 21 percent after reporting earnings in the second-quarter that were way below investors' expectations.

"The market hates uncertainty and that's certainly what we have now", said Ole Hansen, head of commodity strategy at Saxo Bank.

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