North Korea tensions drag down stocks but boost gold

Marco Green
August 13, 2017

-North Korea tension also weighed on the Canadian dollar, which weakened against its US counterpart, despite higher oil prices and stronger-than-expected domestic housing data.

The dollar skidded to an eight-week low against the yen on Friday as escalating tensions between the United States and North Korea triggered yet more investor flight to safety.

24k gold in Dubai is priced at Dh153.25, while 22k can be purchased at the rate of Dh144.

The MSCI World index slipped 0.15 percent, extending Thursday's 1.1 percent drop, its biggest one-day slide since May 17.

London's FTSE 100 dipped by about 90 points, or more than 1%, in morning trading on Friday, adding to a slump of more than 100 points the day before and taking it to its lowest level since May.

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

Equities in Asia were trading mixed in Thursday's trade, although geopolitical tensions continue to weigh on the Asian equities.

USA job openings jumped to a record high in June, outpacing hiring, the latest indication that companies are having trouble finding qualified workers.

US stocks closed lower on Tuesday after a late afternoon selling spree as investors fled for safety after US President Donald Trump vowed to respond aggressively to any threats from North Korea.

Australian shares were down 1.3 percent, set for a weekly loss of 0.5 percent.

United States equities had been on track for a 10th-straight record session Tuesday and the dollar was initially up after the JOLTS survey showed job openings hit a record in the U.S. last month.

Gold prices were benefiting as traders favoured safe haven assets, hitting a two-month high of USD1,275.37.

"If the data continues to come in on the softer side, the market might start to price the Fed staying on hold this year", said Sireen Harajli, FX strategist at Mizuho in NY.

Chinese bluechips lost 1.6 percent, while Hong Kong's Hang Seng was 1.9 percent lower.

In European markets, the French CAC 40 was down 0.7% and Frankfurt's DAX 30 shed 1.2%.

Housebuilders Persimmon and Barratt Developments were among the biggest gainers of the day, up 1.58% and 1.02% respectively.

Computer hardware stocks rebounded following recent weakness, with the NYSE Arca Computer Hardware Index climbing by 1.4 percent. US officials attempt to calm US-North Korea tension appeared to sedate anxious investors.

"But looking ahead unless we start to see a conflict break out or a major stock market correction, (gold) is capped at 1,295 (although) the upside at moment is the favoured direction".

Overseas markets were also lower Wednesday.

Orders fell 4.7 percent from the previous quarter in April-June, suggesting demand is weaker than expected, though economists say the outlook for coming months is more upbeat.

Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in US crude inventories. It has been the leading S&P gainer so far this year, making it particularly vulnerable to a decline.

Other reports by Click Lancashire

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