Economy

US Stocks Poised for Weekly Decline

US Stocks Poised for Weekly Decline

Stock markets nosedived Thursday as investors continued moving into gold amid escalating political tensions between the United States and North Korea.

Singapore's DBS bank added in a statement that the yen "remains the safe haven currency from the sabre-rattling between US President Donald Trump and North Korea".

The Dow Jones Industrial Average fell 163 points, or 0.74%, to 21,886, the S&P 500 lost 31 points, or 1.23%, to 2,443 and the Nasdaq Composite dropped 117 points, or 1.84%, to 6,236.

South Korea's KOSPI .ks11 fell 1.7 percent on Friday to its lowest level since May 24, but its losses for the week are a relatively modest 3.2 percent.

As for where gold can go from here, Capital Economics says that "until there is some certainty as to how the current geopolitical situation will evolve, gold prices are likely to remain well supported and could even rise above $US1,350 per ounce".

Asian stocks slumped on Friday as tensions ramped up between the US and North Korea, sending investors fleeing to less risky assets such as gold, the yen and USA government bonds.

In other words, investors are dumping stocks and buying bonds, which many view as a safe haven in times of turmoil.

The pound was unchanged against the dollar at $1.2981 and up 0.15% against the euro at 1.1040 euros.

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The pan-European Stoxx 600 ended over 1% lower to a five-month low with nearly all sectors in negative territory. Investors, meanwhile, are fleeing to more stable investment markets.

The CBOE Volatility Index .VIX , a barometer of expected near-term stock market volatility, closed at its highest since the election.

"U.S. markets had previously been becalmed amidst the Goldilocks scenario of strong profit growth, low interest rates and full valuations".

Australian shares were down 1.5 percent, set for a weekly loss of 0.8 percent.

Drops among cyclical sectors weighed on the index, with heavyweight miners Rio Tinto, BHP Billiton, Anglo American and Glencore all dropping between 2.9 to 3.1 per cent as tensions between the U.S. and North Korea hit riskier assets, including metals prices. The Treasury yield us 10-year fell to 2,201 % vs. 2,248 % Wednesday night and one of the warrants to 30 years 2,778 %, compared with 2,824 %.

"From a geopolitical perspective, we understand why the escalation in tensions will have shaken some of the complacency out of investors", said Eric Wiegand, senior portfolio manager at U.S. Bank Private Client Wealth Management.

Shanghai posted its biggest one-day drop since December while Seoul stocks again ended deep in negative territory and the won continued its slide against the dollar.

United States crude rose 0.41 per cent to US$48.79 per barrel and Brent was last at US$52.01, up 0.21 per cent.