Stock markets lower, gold price continues to rise amid political tensions

Stock markets lower, gold price continues to rise amid political tensions

Stock markets lower, gold price continues to rise amid political tensions

Wall Street put a floor under global equities on Friday after a weak inflation reading brought investors back into USA stocks even as tensions between the United States and North Korea continued to escalate, though the geopolitical fears still drove safe-haven buying of gold and the yen.

The Nasdaq Composite was up 19.35 points, or 0.31%, at 6 236.22.

Japanese markets were closed for a holiday but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe was on track to post its largest weekly drop since the week before Donald Trump won the USA presidential election in November.

Global markets have been on edge since Tuesday, when President Donald Trump warned North Korea of severe retribution should the authoritarian state proceed with any more missile tests or threats.

"There is a low probability that we will have a war with North Korea", he said, and a larger pullback in stocks is "a buyable drop".

The Canadian dollar was trading at 78.64 cents United States, down from an average price of 78.71 cents U.S. on Wednesday.

South Korea's Kospi stock market index has fallen by 0.4% today, adding to the 1% wiped off shares on Wednesday.

Emerging market stocks lost 1.20 percent.

In Europe, France's CAC 40 fell 1.6 percent to 5,135 while Germany's DAX was down 1.3 percent at 12,133.

The Korean won continued to fall versus the dollar, down 0.13 percent to 1,143.5 on Friday for a 1.6 percent decline on the week. The major index futures are now pointing to a modestly higher open for the markets, with the Dow futures up by 21 points.

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Gold prices held early gains in Asia on Thursday with the market alert for more of the war of words between North Korea and Washington stoking geopolitical tension in the region.

But the yen added to an already-strong weekly rally of close to 1.5 percent, hitting its highest in nearly four months versus the dollar at 108.73 yen.

The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors will repatriate funds should a crisis materialise. The Dow slumped 204.69 points or 0.9% to 21,844.01, the Nasdaq plummeted 135.46 points or 2.1% to 6,216.87 and the S&P 500 tumbled 35.81 points or 1.5% to 2,438.21.

The dollar was further weighed on Friday by the soft US inflation data. "That reset is being triggered by North Korea geopolitical concern and stretched valuations", said Peter Kenny, senior market strategist at Global Markets Advisory Group, New York.

Sterling was last trading at $1.3013, up 0.30 percent on the day.

Gold is sensitive to moves in US rates, which lift the opportunity cost of holding non-yielding assets such as bullion. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.3 basis points to 2.189%.

USA stocks closed higher on Friday as Wall Street clawed back from a sharp decline in the previous session but the market still posted a weekly loss on lingering geopolitical uncertainties. Gold hit a two-month high of $1,278 an ounce amid the nervousness.

"If the USA and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so", the editorial's authors said.

It was the biggest one-day drop since May 17.

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