Stocks, dollar extend slide as US, North Korea tensions intensify

The dollar index was trading 0.2 percent up at 93.73.

The Dow Jones Industrial Average .dji fell 204.69 points, or 0.93 percent, to close at 21,844.01, the S&P 500 .spx lost 35.81 points, or 1.45 percent, to 2,438.21 and the Nasdaq Composite .ixic dropped 135.46 points, or 2.13 percent, to 6,216.87.

Sterling was little changed against the greenback at close to a 2-1/2-week low, having lost around 2pc since the Bank of England last week voted 6-2 to keep interest rates on hold at their record lows.

A statement from the North Korean military called President Donald Trump’s warning that the communist nation would face “fire and fury” if it continued its provocations a “load of nonsense”.

Meanwhile, investors moved money into assets seen as safe havens.

The VIX rose further on Wednesday, rising as far as 12.11, its highest in nearly a month.

A Chinese state-run newspaper said on Friday that China should make clear that it will stay neutral if North Korea launches an attack that threatens the United States, but that if the US attacks first and tries to overthrow North Korea’s government, China will prevent it doing so. The Korean currency last traded at 1,137.70 won to the dollar. Elsewhere, the German Dax has opened down 0.80%, France’s CAC40 index is down 0.87%, and the Euro Stoxx 50 is down 0.81%.

Against the dollar, the franc surged 0.6 per cent to 0.9688 francs, reversing a two-week losing streak. Japan’s Nikkei 225 Index edged down by 0.1%, while Hong Kong’s Hang Seng Index tumbled by 1.1%. Monthly, the same figure fell 0.5% coming in well below expectations of a 0.3% gain.

Instead, investors turned to assets that tend to benefit in times of geopolitical and financial stress.

CURRENCIES: The dollar slipped to 108.97 yen from 109.20 while the euro weakened to $1.1758 from $1.1773.

Japan is the world’s biggest creditor country and there is an assumption investors there will repatriate funds in a crisis. The Swiss franc is a traditional safe haven.

Health-care equipment and services company Henry Schein declined amid a broader slide by health care stocks. “If the Dow drops 1,000 points over a week that might sound like a lot but it’s 5%, and then I think it blows over and buyers start talking about next quarter’s earnings”.

Bond prices rose. The yield on the 10-year Treasury fell to 2.20 percent.

Yields on core government debt fell. US -traded Nikkei futures fell 2 percent to their lowest since mid-May.

Spot gold prices were slightly lower at 1,285.22 an ounce, touching a two-month high earlier.

“We’re not very oversold yet so the market still has more downside left to it”.

Meanwhile, gold demand in India remained sluggish this week as local prices jumped to their highest level in almost three months and a rally in global prices dampened fresh buying elsewhere in Asia.

OIL: Benchmark U.S. crude added 39 cents to settle at $49.56 a barrel on the New York Mercantile Exchange.