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

Trump pounds North Korea

Trump pounds North Korea

A day earlier, the Standard & Poor's 500 index posted its biggest single-day drop in almost three months following Trump's warning to unleash "fire and fury" if Pyongyang continued its nuclear weapons expansion.

The so-called fear gauge - the CBOE Volatility Index (VIX), the most widely followed barometer of expected USA stock market volatility, hit its highest since November 8, when Mr Trump was elected president.

Gold - generally regarded as a safer asset in times of uncertainty - hit its highest price for more than two months on Friday, touching $1,288.92 an ounce before slipping back. The Russell 2000 index of smaller-company stocks gave up 13.20 points, or 0.9 percent, to 1,396.95.

He goes on to say: "In all likelihood the North Korea threat will persist for years to come, with the U.S, and increasingly China, attempting to contain and restrain Kim Jong-un".

SALES SLUMP: J.C. Penney sank 18.9 percent after the struggling department store chain reported quarterly results that fell short of Wall Street's expectations.

Meanwhile, the USA dollar index has been surging since last Friday (August 4), when a better-than-expected USA jobs report boosted the greenback.

The verbal escalation has been further fuelled on Friday by president Donald Trump, who has warned that if the north Korean leader attacked Guam, Pacific island and american territory, he " would regret ".

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U.S. crude rose 0.41 per cent to US$48.79 per barrel and Brent was last at US$52.01, up 0.21 per cent. ANZ fell 1.9%, Commonwealth shed 0.7% and Westpac declined 1.3% after RBA Governor Philip Lowe said the central bank is prepared to be patient on rates for quite some time.

Spot gold added 0.7 per cent to $1,285.70 an ounce. Amid this renewed flare-up in tensions with North Korea, Capital Economics made a decision to take a look at how the precious metal has responded to geopolitical risk events since 1985.

On the currency front, the United States dollar is trading at 108.82 yen compared to the 109.20 yen it fetched at the close of NY trading on Thursday. The Dow Jones industrials average gained 14.31 points, or 0.1 percent, to 21,858.32. Odds of a Fed rate rise during the December meeting now stand at around 40% according to the CME Group's 30-day Fed Fund futures prices.

Nevertheless, traditional safe havens jumped, with the benchmark 10-year US note yield hitting its lowest level since June 28 and gold futures surging more than 1 percent. Major indexes in Asia closed lower.

Chinese bluechips lost 1.6 percent, while Hong Kong's Hang Seng was 1.9 percent lower.

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 bond market was without direction: the yield of u.s. Treasury bills to 10 years, which evolves to the inverse of the bond price, appears to 2,190 %, compared to 2,198 % Thursday evening, and that bills to 30 years at 2,786 %, compared to 2,773 %.

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