Futures lower as North Korea tensions linger

Futures lower as North Korea tensions linger

Global stock markets ended their worst week in months amid rising tensions between the US and North Korea, though USA stock indexes steadied on Friday to close up slightly.

President Trump took aim at North Korea again on Thursday, saying that his earlier threat to unleash "fire and fury" may not have gone far enough.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.6 percent in its third session of declines, heading for a 1.5 percent drop for the week. According to the Associated Press, South Korea's Kospi lost 1.7 percent, while Hong Kong's Hang Seng slid 2 percent.

"The war of words between Donald Trump and North Korean officials has stepped up in recent days and has put investors on edge, prompting a more risk averse approach in the markets", said Oanda analyst Craig Erlam.

USA stocks rose Friday but were still on track for their biggest weekly loss in months, shaken by disappointing earnings results and an escalation of threats between the US and North Korea.

Investors have also headed to other traditional havens, such as the Swiss franc and the Japanese yen.

Rising costs for housing, medical care and food helped push the Consumer Price Index (CPI) up 0.1 percent in July, seasonally adjusted, after no change in June and a 0.1 decrease in May, the US Labor Department said.

A Reuters Datastream index of more than 7,000 stocks across the globe saw its market capitalisation drop from a record high $61.36 trillion on Monday to $60.43 trillion at the close on Thursday. Nine of the index's 10 main groups ended lower.


The last time the S&P closed down more than 1 percent was May 17 when it fell 1.8 percent.

"U.S. markets had previously been becalmed amidst the Goldilocks scenario of strong profit growth, low interest rates and full valuations".

Trucking and software stocks are also seeing notable strength in mid-day trading, while steel stocks have moved sharply lower on the day. "But now, tensions climb rather than decrease", says Michael Currie, vice president, investment advisory at wealth Management TD.

Economic data showed USA producer prices unexpectedly fell in July, recording their biggest drop in almost a year, while separate figures showed the number of Americans filing for unemployment benefits unexpectedly rose last week. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 2.192 percent.

Spot gold added 0.7 per cent to $1,285.70 an ounce.

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

U.S. crude rose 0.41 per cent to US$48.79 per barrel and Brent was last at US$52.01, up 0.21 per cent.

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