Tokyo stocks tumble as US-NKorea tensions mount

Tokyo stocks tumble as US-NKorea tensions mount
Tokyo stocks tumble as US-NKorea tensions mount
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12 August, 2017

"European indices are following their Asian counterparts lower once more today, as the risk aversion seen over the past two days continues apace", said IG market analyst Joshua Mahony in a note.

The yen is perceived as a safe haven because Japan is the world's biggest creditor country and investors there have tended to repatriate funds in times of crisis.

A Labor Department report showed its producer price index posted a surprise drop in July, down 0.1% for the largest slide in nearly a year.

Gold prices rose while the yen hit an eight-week high against the dollar and made broad gains against other peers, reacting to the political tensions stemming from the Korean Peninsula.

"Of course it's all come at a time when share markets are due for a correction, so North Korea has provided a flawless trigger", he added. U.S. PPI came in at -0.1%, below the 0.1% forecast and previous read.

Emerging market stocks lost 1.28 percent. The Korean won is also suffering - the U.S. dollar is up 0.58% against the currency at the time of writing (7.30 a.m. GMT/1.30 a.m. ET), while the pound is up 0.77% against the won, and the euro is up 0.53% against it.

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.

The broad-based S&P 500 shed 0.6 percent to 2,459.50, while the tech-rich Nasdaq Composite Index tumbled 0.8 percent to 6,299.12.

Markets are now awaiting USA consumer price data for July, due later today.

South Korea's benchmark Kospi fell 1.1 per cent to the lowest since June 21, while the won fell the most in three weeks. It was last up 1.2% at 1.1305 per euro.

"Standard safe haven instruments are still being preferred at this point, with the yen well bid against its peers and gold a little higher after seeing strong gains on Wednesday, while equities are getting no love", said Craig Erlam, senior market analyst, at Oanda. Kashkari is the most dovish Fed member and he is likely to remain that way especially if inflation misses the mark. That is significant because yields fall when bond prices rise.

Data showed US producer prices unexpectedly fell in July, recording their biggest drop in almost a year, while another set showed the number of Americans filing for unemployment benefits unexpectedly rose last week. Northern Star Resources was up 3 per cent, while Evolution Mining rose 2 per cent, Newcrest Mining gained 2.3 per cent and Resolute Mining rose 2.1 per cent. Westgold Resources was the biggest gainer, rising 6.6 per cent.

Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in United States crude inventories, leaving prices volatile.


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