Asian stocks slump on profit-taking amid US-NKorea tensions

Gladys Abbott
August 13, 2017

On Wednesday, North Korea's military said it is considering missile strikes near the USA territory of Guam, warning that it is ready to stage an all-out war if Washington launches a preventive war against it.

The Swiss franc gave up some gains (http://www.marketwatch.com/story/swiss-franc-gives-up-some-gains-as-investors-monitor-us-north-korea-standoff-2017-08-10), as the USA dollar was flat across the board.

Asian stock markets slumped on Friday following overnight losses on Wall Street as U.S. President Donald Trump's bellicose remarks prompted investors to unload shares in companies that have been on the rise in recent months.

Sydney was a rare bright spot in Asia-Pacific with stocks closing 0.4 percent up as Australia's biggest bank posted record annual profits. The Dow is down 123.95 points or 0.6 percent at 21,924.75, the Nasdaq is down 95.89 points or 1.5 percent at 6,256.44 and the S&P 500 is down 23.40 points or 1 percent at 2,450.62.

"Obviously we are looking at the increased tensions between the USA and North Korea", said Brad Bechtel, managing director FX at Jefferies in NY.

Emerging market stocks lost 1.08 percent.

All three major equity benchmarks finished sharply lower on Thursday for their worst day since mid-May, with the trifecta of indexes all tumbling for a third straight session for the first time since mid-April, amid a persistent war of words between the USA and North Korea. Wells Fargo still ended up 0.3 percent at $52.71.

Escalating tensions around Pyongyang's nuclear ambitions sent a shiver through markets worldwide and pushed the dollar to below 109.7 yen in afternoon forex trade to an eight-week low against the safe haven currency, piling more pressure on Japanese stocks.

The Korean won fell more than 1 percent at one point and is now down 0.5 percent.

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The Swiss franc was on track for its biggest daily gain against the euro since the Swiss National Bank removed its cap on the currency in January 2015.

Yields on core government debt fell. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.5 basis points at 2.226 percent.

South Korea's Kospi sank 1.8 percent to 2,316.88 and Hong Kong's Hang Seng shed 1.5 percent to 27,041.83.

Investors, who took the North Korea report from Japan in their stride earlier in the day, lost their appetite for risk after Trump's comments to reporters during his vacation at his golf club in New Jersey.

Spot gold added 1 percent to $1,272.83 an ounce.

OIL: Benchmark U.S. crude lost 24 cents to $48.37 per barrel on the on the New York Mercantile Exchange while Brent crude, used to price global oils, declined 20 cents to $51.70 per barrel in London.

Across the Tasman Sea, New Zealand's S&P/NZX 50 added 0.2% to 7,799.64, led higher by local cargo giant Mainfreight, which was 1.8% firmer.

The tech-laden Nasdaq Composite Index plummeted 135.46 points, or 2.1%, to close at 6,216.87.

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