Economy

Asia stocks snap back into the red on lingering N.Korea tensions

Asia stocks snap back into the red on lingering N.Korea tensions

In a note to investors, Paul Christopher, head global market strategist, and Tracie McMillion, head of global asset allocation, suggest, "the threat of a nuclear weapon is certainly more serious than previous threats, but that threat also may increase the probability of a diplomatic solution". Bond and gold prices, traditional havens for nervous investors, were little changed, and the VIX, a measure of how much volatility investors expect in stocks, slid 6.7 percent following a 44.4 percent jump the day before.

"Trump's comments about North Korea have created nervousness and the fear is if the President really means what he said: "fire and fury"," said Naeem Aslam, chief market analyst at Think Markets in London.

TOUGH TALK: Tensions between the USA and North Korea continued to simmer early Friday.

The VIX rose further on Wednesday, rising as far as 12.11, its highest in nearly a month.

Investors fled to gold on Wednesday as tensions between North Korea and the U.S. escalated, pushing the precious metal's price to an intraday high of $1276.2/oz.

Materials, home to gold producers and other resource-based companies, was the only gainer among the index's 10 main sectors and was up 0.6 per cent. Germany's DAX was flat, while France's CAC 40 fell 1.1 percent.

South Korea's won currency dropped 0.9 per cent against the dollar to its lowest close since July 13.

Shares of Apple, Amazon and Facebook fell more than 2% Thursday. Chinese blue chips closed flat but Hong Kong's Hang Seng fell 0.4 per cent.

The Japanese yen strengthened by 0.5 per cent to around 109.70 per dollar.

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The yen is perceived as a safe haven because Japan is the world's biggest creditor country and investors there have tended to repatriate funds in times of crisis.

The Swiss franc reversed a two-week losing streak and gained 1.1 per cent to as firm as 0.9611 per dollar. Asian and European stocks continued the sharp decline Friday. Heating oil fell 1 cent to $1.63 a gallon. "That reset is being triggered by North Korea geopolitical concern and stretched valuations", said Peter Kenny, senior market strategist at Global Markets Advisory Group, New York.

The euro inched down 0.1 percent to $1.1744 while the dollar index against a basket of major currencies added 0.1 percent to 93.620.

Shares of Michael Kors ended up 21.5 percent, after the luxury goods maker raised its full-year revenue forecast.

Analysts said yields, which move inversely to prices, could fall further if the tensions build further, even if central bankers in the United States continue to talk of raising interest rates of scaling back stimulus programmes.

Wall Street closed sharply lower, with Dow Jones down over 200 points on Thursday.

Spot gold prices were unchanged at $1,286.27 an ounce, after touching a two-month high earlier.

U.S. Defense Secretary Jim Mattis told Pyongyang it should stop any actions that would lead to the "end of its regime and the destruction of its people".

The dollar weakened after news that US producer prices unexpectedly fell in July, recording their biggest drop in almost a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.


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