European markets also slid in early trade after Wall Street indices suffered their biggest losses in almost three months Thursday, while the dollar struggled to recover from eight-week lows below 109 yen as investors fled to safe haven assets.
Wall Street’s so-called “fear gauge”, the CBOE Volatility Index, eased after hitting its highest levels since Election Day on Friday (http://www.marketwatch.com/story/wall-streets-fear-gauge-on-course-for-biggest-weekly-surge-in-2-years-2017-08-11).
U.S. President Donald Trump’s warning North Korea faced “fire and fury” and Pyongyang’s threat of possible retaliation drove investors out of stocks and into the yen, Swiss franc, gold and government debt.
INFLATION: The Labor Department said consumer prices edged up 0.1 percent in July following no gain in June.
The market was also waiting for USA inflation data on Friday that would offer clues about the extent to which the strengthening USA labour market is spilling over into inflation.
The annual decline in prices stands at 1.7% in July, compared to 1.6 % in June, according to the index, below the 2% target of the federal Reserve. 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.
Spot gold added 0.4 percent to $1,265.18 an ounce, pulling away from the previous session’s two-week lows.
Amid the hot rhetoric, US stocks sold off sharply on Thursday, with the S&P 500 falling more than 1 percent.
(Employees push a trolley laden with crates of one kilogram gold bars at the YLG Bullion International Co. headquarters in Bangkok, Thailand.Getty Images/Dario Pignatelli/Bloomberg) Gold has rallied 2.3% this week on the heels of renewed tension with North Korea.
An index of 15 gold miners tracked by Bloomberg Intelligence climbed 1.1 percent, led by Toronto-based Yamana Gold Inc.
The Dow Jones Industrial Average rose 14.31 points to close at 21,858.32.
Burger chain Wendy’s was up 4.20 per cent after it reported better-than-expected quarterly profit and sales. Disappointing company earnings also helped pull the market lower, with consumer-focused companies and technology stocks among the biggest decliners. The S&P has lost more than 1 percent on only three days this year. On the Nasdaq, 1,787 issues fell and 564 advanced.
Bond prices were little changed.
The euro slid 0.6 percent to 128.92 yen, and fell 0.1 percent against the dollar to $1.1735.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5 percent, while Japan’s Nikkei lost 1.3 percent as the stronger yen sapped investor appetite. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 2.212%.