Thursday, 19 October, 2017

FTSE ends down as shares hit by US-North Korea tensions

President Donald Trump speaks in the Roosevelt Room of the White House in Washington Wednesday Aug. 2 2017 President Donald Trump speaks in the Roosevelt Room of the White House in Washington Wednesday Aug. 2 2017
Nellie Chapman | 12 August, 2017, 15:12

Investors instead turned to safe-haven assets such as gold, pushing it to a two-month high, and the Japanese yen JPY= rose.

"Traders should closely watch global equities today, with further falls and risk aversion likely pumping more safe-haven flows into precious metals", said Jeffrey Halley, a senior market analyst at OANDA.

The Swiss franc and Japanese yen had notched up impressive gains against the dollar on Wednesday after US President Donald Trump warned North Korea that it would face "fire and fury" if it threatened the United States. South Korea's Kospi slid 0.44%, extending losses after the index slid more than 1% in the last session.

Tensions spiked yet further when North Korean state media later said Pyongyang was considering strikes near USA military installations in Guam.

USD/JPY changed hands at 109.06, down 0.12%, while AUD/USD traded at 0.7869, down 0.08%.

Asian markets lower: Tokyo's Nikkei shed 1.3 per cent, Hong Kong's Hang Seng lost 0.4 per cent, and China's Shanghai Composite fell 0.2 per cent.

In 3.14pm trading, the Standard & Poor's 500 Index inched 0.06 per cent lower.

More than 430 stocks from all USA exchanges hit their lowest levels in 52 weeks or more yesterday, the most for any session since mid-November right after Trump was elected.

Gold fell $2.10 to $1,262.60 an ounce.

"That did temporarily shake investors' complacency, but we think markets are ready to move higher in the back half of the year, and earnings and economic data are going to drive that".

"The escalation of the geopolitical situation between the US and North Korea is beginning to rattle investors' nerves as was witnessed in the VIX index yesterday", said Peter Cardillo, chief market economist at First Standard Financial.

"While the U.S. President insists on ramping up the war of words, there is a decreasing chance of any diplomatic solution", Carnell said.

Among economic data, the U.S. Labor Department is likely to report that initial jobless claims remained unchanged at 240,000 for the week ended August 5.

The dollar extended losses against the yen to hit a new two-month low.

USA producer prices unexpectedly recorded their biggest drop in almost a year, and the number of Americans filing for unemployment benefits unexpectedly rose last week. By 2.50pm, it was trading down 0.1%.

The dollar index .DXY , which tracks the greenback against six rival currencies, was down 0.12 percent to 93.53, after rising as high as 93.888 earlier in the session. Away from the geopolitical drama, USA inflation data is due at 1330 GMT.

Global benchmark Brent also lost 0.9 percent to $51.44, after Thursday's 1.5 percent drop.

European bourses also looked set to open lower across the board, with Eurostoxx 50 futures already down 0.7 percent in early trade.

Nvidia's quarterly revenue in its data center and automotive businesses missed estimates, dragging the chipmaker's shares down 8.6 percent.

USA crude futures extended losses from Thursday, when they tumbled 2 percent on fears of slowing demand and lingering concerns over a global oversupply.