Yen gains broadly on latest bout of Korean tensions

Judith Bessette
Agosto 13, 2017

Disappointing economic data releases weighed on both sides of the Atlantic today with a negative goods trade balance for the United Kingdom (-0.1% versus expectations of 1.4%), higher unemployment claims from the U.S. (244,000) and also a negative month-on-month PPI figure for the USA (-0.1%).

"The slight bias to the upside [in stocks] is a result of the CPI number".

The stage was set for the USA indexes to go lower early Wednesday as investors around the world reacted to the rising war of words between the US and North Korea, pushing global market indexes lower.

Traders across the globe reacted with dismay to Trump's warning Thursday that his earlier threat to unleash "fire and fury" on the reclusive nuclear-armed state may not have been "tough enough".

In the first four days of the week, the Standard & Poor's 500 index swung from marking its latest record high to posting its biggest single-day drop in almost three months.

"There's not a great incentive to buy big", said Lerner of SunTrust Advisory.

Trump launched another rhetorical salvo at the North to keep its nuclear weapons and ballistic missile programmes in check.

. Spot rose 1.3 per cent on Thursday, the biggest daily gain since mid-May. The pan-European FTSEurofirst 300 index .fteu3 lost 1.11 percent.

Emerging market stocks lost 1.27 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.47 per cent lower.

MARKETS OVERSEAS: In Europe, Germany's DAX was down 1 percent, while France's CAC 40 fell 1.4 percent. The hope, and perhaps the expectation, is that this latest round of rhetoric will also turn out to be just talk, said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management.

On Thursday, the CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the USA presidential election.

Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a selloff, and the tensions over North Korea proved to be the trigger.

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The Japanese yen hit an eight-week high against the USA dollar, and US -traded Nikkei stock futures dropped 2 percent to their lowest since mid May.

The dollar index.DXY, which tracks the greenback against six rival currencies, was down 0.17 percent to 93.391. It would be ideal for the precious metals if the dollar were to weaken again now, and that could happen courtesy if U.S. economic data is weaker. The Russell 2000 index of smaller-company stocks gave up 10 points, or 0.8 percent, to 1,399. The index had its biggest drop since mid-May a day earlier.

The dollar was down 0.77 percent against the yen JPY= at 109.21 yen.

US stocks closed slightly lower Wednesday, making up much of the ground they lost earlier following a rare batch of earnings disappointments by Walt Disney and other big companies.

"Many fear that as a USA ally, the United Kingdom is also susceptible to being dragged into an unnecessary and unwanted conflict".

The yield on the benchmark 10-year U.S. Treasury note fell to 2.255 percent from its U.S. close of 2.282 percent on Tuesday.

US producer prices unexpectedly recorded their biggest drop in almost a year, and the number of Americans filing for unemployment benefits unexpectedly rose last week.

Gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose $3.40, or 0.26%, to $1,293.37 a troy ounce.

This week has seen its biggest rise since June 2016.

Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in USA crude inventories, leaving prices volatile.

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