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

Judith Bessette
Agosto 13, 2017

FIRE AND FURY: Keeping up his tough talk, Trump told reporters that Kim Jong Un's government should "get their act together" or face extraordinary trouble, and suggested his earlier threat to unleash "fire and fury" on North Korea was too mild.

The Japanese Yen saw broad gains in the wake of the rhetoric bandied about by the leaders of the United States and North Korea. MSCI's main index of Asia-Pacific shares, excluding Japan, was last down 0.5 percent. The euro is down 0.1 percent at $1.1738.

On Thursday, New York Fed President William Dudley said he expects sluggish US inflation to rise over the next several months while the hot labor market gets even hotter. The Russell 2000 index gave up 1.7 percent to 1,372.54.

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 US and North Korea.

The dollar was down 0.53 percent against the yen at 109.48 yen, after briefly dropping as low as 109.53. Chinese blue chips are about flat but Hong Kong's Hang Seng index is down 0.3 percent. With the drop on the day, the major averages are adding to the losses posted in the two previous sessions.

Although Japan could be in the front line of any clash with North Korea, the yen is benefitting because Japan is the world's biggest creditor nation and Japanese investors tend to repatriate funds in times of stress, attracting other flows.

In Europe, Britain's FTSE 100 was down 1.1 percent to 7,306, while France's CAC 40 fell 1.1 percent to 5,058. 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.

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Ralph Lauren Corp. shot up 13.3 percent after reporting a net income of $59.5 million in earnings through July 1, up from a loss of $22.3 million in the year-ago period. It was last up 1 percent at 1.133 per euro.

"The most visible impact of escalating verbal threats between North Korea and President Trump comes at the long end of the U.S. Treasury curve", said Jim Vogel, interest rates strategist at FTN Financial in Memphis.

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.

Trump's comment pushed Wall Street lower, with only utilities making gains, and drove the VIX "fear gauge" of expected volatility on the S&P 500 to its highest in nearly a month. TMX Group Ltd was up 3.2 percent to C$68.02, while Quebecor Inc added 4.3 percent to C$45.20 and Canadian Tire Corp Ltd climbed 5.7 percent to C$149.89.

Overall, gold continued to edge higher to the $1,280 per ounce area in European trading.

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

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