Markets extend losses as Korea tensions escalate

Trump's 'fire and fury' warning hits stocks, lifts Swiss franc and gold

Trump's 'fire and fury' warning hits stocks, lifts Swiss franc and gold

"As a portfolio manager, you say, 'Do I think we'll get a war out of this?'" said Torsten Slok, chief worldwide economist at Deutsche Bank, referring to the back and forth between North Korea and President Donald Trump. The Dow Jones industrials average gained 14.31 points, or 0.1 percent, to 21,858.32. Earlier in the week, Trump said the US would unleash "fire and fury" on North Korea if it continued to threaten the U.S. "You're less than 2 percent off the high for the S&P heading into a weekend where uncertainty with North Korea still lingers".

Computer hardware stocks rebounded following recent weakness, with the NYSE Arca Computer Hardware Index climbing by 1.4%.

In Asia, several indexes closed lower overnight.

"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".

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.

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 materialize.

The dollar was up 0.05 percent to 109.25 yen, after earlier falling to a sixteen-week low following data showing USA consumer prices rose less than expected in July.

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.

Minneapolis Fed President Neel Kashkari, who has advocated for the Fed to halt interest rate hikes until inflation picks up gain, on Friday said his colleagues are telling each other "a ghost story (http://www.marketwatch.com/story/feds-kashkari-says-central-banks-hawks-are-spooked-by-ghost-story-of-higher-wages-2017-08-11)" about higher wage inflation that scared them into raising short-term rates.

On Friday, the S&P 500 rose 3.11 points, or 0.1 percent, to 2,441.32.

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.

But losses soon resumed, with Tokyo edging down as the Nikkei again came under pressure from the strength of the safe-haven yen, which hit eight-week highs Wednesday against the dollar.

"There are four more (inflation) prints between now and the December FOMC meeting and we expect the Fed to remain data-dependent, if a touch more cautious", said TD Securities in a research note. 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%.

Gold was up $3 at $1293 an ounce, adding to 2-month highs.

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

USA crude rose 0.43 percent to $48.80 per barrel and Brent was last at $52.01, up 0.21 percent on the day.