As North Korea rattle drags down stocks, value of gold and yen rise
The Japanese yen hit an eight-week high against the U.S. dollar, while spot gold also reached a two-month high. Photograph: (Reuters)
Stocks around the world fell sharply on Thursday and investors moved into the yen, gold and other safe-haven assets amid more aggressive talk between the United States and North Korea.
MSCI's gauge of stocks across the globe shed 0.77 per cent, on track for its third straight day of declines as it pulled further back from all-time highs.
The Japanese yen hit an eight-week high against the US dollar, while spot gold also reached a two-month high.
North Korea said it was completing plans to fire four intermediate-range missiles over Japan to land near the US Pacific island territory of Guam in an unusually detailed threat that further heightened tensions with the United States.
The rise in geopolitical tensions this week, which heightened after US President Donald Trump on Tuesday warned North Korea that it would face "fire and fury" if it threatened the United States, has drawn investor attention away from second-quarter corporate earnings season, which is winding down.
"The story today is North Korea and there was nothing in the earnings that was bullish enough to pull people away from focusing on North Korea," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
The Dow Jones Industrial Average fell 94.55 points, or 0.43 per cent, to 21,954.15, the S&P 500 lost 19.51 points, or 0.79 per cent, to 2,454.51 and the Nasdaq Composite dropped 76.39 points, or 1.2 per cent, to 6,275.94.
Shares of US department stores Kohl's and Macy's were weak after their results.
The pan-European FTSEurofirst 300 index lost 1.19 per cent.
Shares of staffing firm Adecco slumped 6.4 per cent after its results.
In currencies, the yen strengthened 0.64 per cent versus the greenback at 109.37 per dollar.
"The yen is the big story really. Risk aversion is still very much a concern for markets," said Shaun Osborne, chief currency strategist, at Scotiabank in Toronto.
The dollar index, which measures against a basket of currencies, fell 0.05 per cent.
The dollar weakened after news that US producer prices unexpectedly fell in July, recording their biggest drop in nearly a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.
US Treasury long-dated yields dropped to six-week lows, pressured by US-North Korea tensions and the weak data that further reduced expectations of an interest rate hike in December.
Benchmark 10-year notes last rose 5/32 in price to yield 2.2255 per cent, from 2.242 per cent late on Wednesday.
The 30-year bond last rose 5/32 in price to yield 2.8107 per cent, from 2.818 per cent late on Wednesday.
In commodities, US. crude fell 0.67 per cent to $49.23 per barrel and Brent was last at $52.58, down 0.23 per cent on the day.
Spot gold added 0.7 per cent to $1,285.70 an ounce.
"For now, the uptrend is very much intact in gold, reacting to external geopolitical events," said Jonathan Butler, commodities analyst at Mitsubishi in London.