Selloff in stocks takes a breather; gold and yen tick up

People walk past an electronic board showing stock prices outside a brokerage at a business district in Tokyo Japan

People walk past an electronic board showing stock prices outside a brokerage at a business district in Tokyo Japan

The sabre-rattling - sparked when President Donald Trump stunned the world with an apocalyptic warning to unleash "fire and fury" on North Korea - continued Thursday as Pyongyang mocked the U.S. leader as "bereft of reason".

The markets may benefit from bargain hunting, as some traders look to pick up stocks at reduced levels following the pullback seen over the past few sessions.

With the tense mood pushing European shares down for a third day and Wall Street set to fall again, global stocks were on course for their worst week since Donald Trump won November's election.

The Dow Jones Industrial Average rose 14.31 points, or 0.07 per cent, to end at 21,858.32, the S&P 500 gained 3.11 points, or 0.13 per cent, to 2,441.32 and the Nasdaq Composite added 39.68 points, or 0.64 per cent, to 6,256.56.

Trump suggested in remarks on Thursday that his comments threatening North Korea with "fire and fury" may not have been tough enough. "You're less than 2 percent off the high for the S&P heading into a weekend where uncertainty with North Korea still lingers".

Apart from geopolitical worries, some technical analysts like Tom McClellan, editor of the McClellan Market Report, blamed seasonality for this week's retreat given August's record as a weak month for stocks.

In Asia, several indexes closed lower overnight.

In an apparent response to Trump's tweet, a statement issued by North Korea's official KCNA news agency claimed the president is "driving the situation on the Korean peninsula to the brink of a nuclear war".

South Korea's fell 1.7 percent to its lowest since May 24, but its losses for the week are a relatively modest 3.2 percent.

Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a selloff, and the tensions over North Korea proved to be the trigger.

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 dollar was further weighed Friday by the soft USA inflation data.

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.

Sterling was last trading at US$1.3007, up 0.25 per cent on the day.

Copper traded at $2.912, down 0.25%, while natural gas tacked on 0.23% to $2.991.

Despite the past week's decline, the major indexes are in positive territory so far this year, led by the Nasdaq, which is up 16.2 percent.

"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.

The yield on the benchmark 10-year Treasury note settled at 2.191%, its lowest close since June 26, compared with 2.211% Thursday and 2.269% last Friday.

After touching a more than two-month high, spot gold last added 0.3 percent to $1,290.00 an ounce.

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

USA crude rose 0.41 percent to $48.79 per barrel and Brent was last at $52.01, up 0.21 percent.

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.

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