Published: Sat, August 12, 2017
Business | By Max Garcia

Asia stocks, US$ extend slide as US-North Korea tensions intensify

Asia stocks, US$ extend slide as US-North Korea tensions intensify

The dollar hit an eight-week low against the Japanese yen on Thursday, as the escalating tensions between the United States and North Korea drove investors to seek safety in assets viewed as less risky. It was on course for a weekly rise of about 5%, the biggest such gain since July 2016.

With the drop on the day, the ten-year yield extended the decline seen over the two previous sessions, falling to its lowest closing level in well over a month.

Gold prices continued to move higher and now they are back in the highs of their yearly range and this means that they are very close to their highs of the year and thus in an important position.

"If we break above this downtrend, then we potentially open up the region up to $1,300, the recent highs we saw in April and June", Butler said. "But we're in a low inflationary environment, which can help valuations remain elevated for longer than they would otherwise". "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". Is that a reason to be?

Gold got an extra boost after data showed United States consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year. Australia's S&P/ASX 200 edged down almost 0.1 percent to 5,760.90, while South Korea's Kospi fell 0.5 percent to 2,357.84.

US DATA: The other potential driver in markets will be upcoming USA economic data, including monthly inflation figures, which could go a long way to determining expectations for the pace at which the Federal Reserve raises interest rates.

It makes sense that investors would start to cut their positions in some of their winners and look for other investments that might be better bets for a rockier period for the markets and global economy.

Titled "Reckless game over the Korean Peninsula runs risk of real war", the editorial suggested China will stay neutral if North Korea strikes first, but will intervene if the U.S.is the first mover. The remarks, following North Korea's earlier revelation of a plan to launch a salvo of ballistic missiles toward the U.S. Pacific territory of Guam, gave investors further incentive to take to the sidelines at least in stock markets.

On the Fed speaker list, Minneapolis Fed President Neel Kashkari is expected to speak in a question-and-answer session at the Independent Community Bankers of Minnesota Annual Convention at 11:30 a.m. On August 10, it rose 44.4% to 16.0.

In Europe, Britain's FTSE100 was down over one percent, Germany's DAX traded 0.5 percent lower, while the French CAC40 index was 0.62 percent in the red, as of 9:00am GMT.

Cracks in the stock market rally led some investors to put their cash in havens like precious metals and ultra-safe government bonds.

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