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emfizz.com October 20, 2017


North Korea tensions send dollar to eight-week low vs. yen

13 August 2017, 02:20 | Jan Cross

South Korea's KOSPI fell 1.8 percent to almost a three-month low.

Biswas: While geopolitical risks due to escalating tensions on the Korean peninsula have been reflected in some modest declines in some global equity markets in recent days, there has been many previous episodes of rising military tensions on the Korean peninsula.

The negative headlines provided many investors with an opportunity to pocket some of their recent gains following a string of record highs fueled by strong corporate earnings.

US equities steepened their losses late in the session after President Donald Trump said his earlier warnings to North Korea may not have been tough enough.

On Friday, an MSCI index of stocks across the globe posted its largest weekly drop since the week before Trump won the United States presidential election in November. That's the index's lowest level in two months.

Asian equities extended heavy losses Friday as a worldwide sell-off triggered by US President Donald Trump doubling down on his North Korea rhetoric showed no sign of abating. "You're less than 2 per cent off the high for the S&P heading into a weekend where uncertainty with North Korea still lingers". The Dow Jones Industrial Average .dji fell 204.69 points, or 0.93 percent, to close at 21,844.01, the S&P 500 .spx lost 35.81 points, or 1.45 percent, to 2,438.21 and the Nasdaq Composite .ixic dropped 135.46 points, or 2.13 percent, to 6,216.87. The index closed at its highest level since November 8, when Trump was elected president.

Against the greenback, the Swiss franc eased about 0.1 percent to 0.9645 per dollar, having surged about 1.1 percent on Wednesday.

The Swiss franc and Japanese yen are often sought out in times of geopolitical tension or global financial stress, partly because both countries have big current account surpluses. The FTSE 100 index of leading British shares declined 0.6 percent.

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"North Korea is being used as a reason to sell Japanese stocks, just as it was used yesterday in the United States", said Soichiro Monji from Daiwa SB Investments in Tokyo. Hong Kong's Hang Seng was off 0.3 percent.

Geopolitics aside, investors were also focused on U.S. economic data and monetary policy, following the release of inflation data, Erlam said.

Investors also drew some encouragement from new government data showing USA inflation at the consumer level inched higher last month.

The influential financial stocks were among the biggest drags on the index, with Royal Bank of Canada down 1.5 percent to C$92.88, and Manulife Financial Corp falling 4.7 per cent to C$24.43, its largest drop since early August previous year.

Seagate Technology gained 2.3 percent after investor ValueAct disclosed that it had acquired a 7.2 percent stake in the digital storage company.

Bond prices, which move inversely to yields, closed higher. Palladium added 0.4% to $899.80 per ounce and was on track to end the week about 2% higher.

The pan-European FTSEurofirst 300 index lost 1.01 percent and MSCI's gauge of stocks across the globe shed 0.26 percent for a weekly loss of 1.6 percent, the largest since the week to November 4. Humana rose $4.74, or 1.9 percent, to $254.96.



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