Stocks, dollar extend slide as US-North Korea tensions intensify


Asian stocks were mostly lower in Thursday trading, as investors began to digest worries over the escalating tensions caused by North Korea's nuclear ambitions.

Wall Street stocks posted their biggest declines in almost three months on Thursday (Aug 10) as President Donald Trump doubled down on his warnings to North Korea over its nuclear programme.

On Thursday, New York Fed President William Dudley said he expects sluggish United States inflation to rise over the next several months while the hot labor market gets even hotter. Eastern time. The Dow Jones industrial average slid 120 points, or 0.5 percent, to 21,928.

Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan had skidded 1.55 per cent, its biggest one-day loss since mid-December, to leave it down 2.5 per cent for the week. The VIX has hovered near record lows this year.

Most large-cap stocks were mixed across the board.

Others said it was too early to conclude the week's moves marked the beginning of a deeper downturn.

The jump in the franc had prompted hedge funds to unwind leveraged positions which involved borrowing in the weak Swiss currency and investing the proceeds in the relatively higher-yielding Australian dollar and the Canadian dollar. The S&P 500 fell 1% Thursday but is still up around 9% so far this year.

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In more back-and-forth between President Trump and North Korea, Pyongyang General Kim Rak Gyom, leader of the country's strategic forces, said that "sound dialogue is not possible with such a guy bereft of reason and only absolute force can work on [Trump]".

A hot war with North Korea could make those episodes seem benign in comparison.

"What has changed this time is that the scary threats and war of words between the United States and North Korea have intensified to the point that markets can't ignore it", said Shane Oliver, head of investment strategy at AMP Capital in Sydney. M stock is now down 0.4% to trade at $23.43, asthe company prepares to report earnings tomorrow. Small-company stocks fell more than the rest of the market.

A series of downbeat corporate reports also weighed on US stocks. Macy's was down 4.4 percent after the company said its sales continued to decline in the second quarter. Sydney's S&P-ASX 200 gained 0.5 per cent to 5,773.70 while New Zealand also rose. Japan is the world's biggest creditor nation and there is an assumption Japanese investors may repatriate their foreign holdings in times of heightened global uncertainty.

Also adding support to gold was disappointing U.S. economic data which reduced the chances of a U.S. Federal Reserve interest rate hike later this year.

Spot gold was almost flat at $1,285.76 per ounce at 0447 GMT and was set for a weekly gain of over 2 percent.