USA stock futures, dollar slip on rising Korean tensions

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. Trump’s comments came after a Washington Post report (https://www.washingtonpost.com/world/national-security/north-korea-now-making-missile-ready-nuclear-weapons-us-analysts-say/2017/08/08/e14b882a-7b6b-11e7-9d08-b79f191668ed_story.html?utm_term=.0938becb046e) that North Korea has built a miniaturized nuclear warhead.

Trump issued a new tweet-warning to Pyongyang on Friday: “Military solutions are now fully in place, locked and loaded, should North Korea act unwisely”.

In overseas trading, stock markets across the Asia-Pacific region saw continued weakness during trading on Friday. The Japanese market was closed in observance of the Mountain Day holiday.

Singapore’s DBS bank added in a statement that the yen “remains the safe haven currency from the sabre-rattling between US President Donald Trump and North Korea”.

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.

“When investors are optimistic to the extreme, it means that most of their money is already in the market and there’s no more money coming in”, Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida.

Sterling was last trading at $1.3009, up 0.27 percent on the day.

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.

Australian shares fell to near three-week lows in a broad-based selloff.

Traders said hedge funds had cut leveraged bets against the franc, prompted in part by worries about increased US-North Korea tension. “But looking ahead, unless we start to see a conflict breakout or a major stock market correction, (gold) is capped at $1,295, (although) the upside at the moment is the favoured direction”.

On the currency front, the U.S. dollar is trading at 108.82 yen compared to the 109.20 yen it fetched at the close of NY trading on Thursday.

United States producer prices Thursday disappointed, as traders await consumer price inflation figures later Friday.

The strength in the sector came amid a jump in the price of gold.

The Korean won also continued to fall, down 0.45 percent to 1,147.2.

U.S. producer prices unexpectedly recorded their biggest drop in almost a year, and the number of Americans filing for unemployment benefits unexpectedly rose last week.

Crude futures extended losses on fears of slowing demand and lingering concerns over a global oversupply meanwhile.

USA crude fell 0.41 percent to $48.39 per barrel and Brent was last at $51.68, down 0.42 percent on the day.