Yen firms after North Korea says considering plan to strike Guam

Paterniano Del Favero
Agosto 13, 2017

U.S. President Donald Trump said Tuesday that "North Korea best not make any more threats to the United States", adding, "They will be met with fire and fury like the world has never seen".

The pan-European FTSEurofirst 300 index lost 1.19%. But if North Korea were to launch missiles toward Guam or Hawaii "that would certainly be more of an escalation" that could potentially roil markets more.

Japanese markets were closed for a holiday but the in-demand yen powered on, hitting an eight-week high of 108.91 yen to the dollar, adding to its biggest weekly gain since May.

"What has changed this time is that the scary threats and war of words between the US and North Korea have intensified to the point that markets can't ignore it", said Shane Oliver, head of investment strategy at AMP Capital in Sydney. The U.S. currency was down 0.15 percent at 110.140 yen, edging towards a seven-week low of 109.850 set last week.

While the Russell 2000 index ended up 0.1 percent on the day, it was more than 5 percent below its July 25 record close and for the week it fell 2.7 percent, its biggest weekly drop since February 2016.

The big four banks were all lower led by ANZ which was down 1.91 per cent at $29.26. The Shanghai Composite slipped 0.4 percent to 3,261.75. Macy's was down 4.4 percent after the company said its sales continued to decline in the second quarter.

Bond prices rose. The yield on the 10-year Treasury note slipped to 2.20 percent from 2.25 percent late Wednesday.

Gold-related stocks were well-supported with Newcrest Mining up 2.1 per cent at $21.85 and Evolution Mining up 2.2 per cent to $2.34. Kohl's also declined, giving up $2.43, or 5.8 percent, to $39.50. Crude oil prices extended their slide as exports from key OPEC producers rose, despite news of lower crude shipments from Saudi Arabia.

US crude was down 0.9 percent at $48.16 per barrel, on track for a weekly loss of 2.9 percent. Brent crude, used to price worldwide oils, slid 80 cents, or 1.5 percent, to $51.90. Wholesale gasoline dropped 2 cents to $1.60 a gallon, while heating oil shed 2 cents to $1.63 a gallon.

The Japanese yen hit an eight-week high against the USA dollar, while spot gold also reached a two-month high.

REA Group shares fell $4.07 cents, or almost six per cent, to $64.35 after its full-year net profit slipped 19 per cent to $206.3 million. Silver gained 20 cents, or 1.2 percent, to $17.07 an ounce.

The dollar notched a two-month trough on the safe-haven Japanese yen and was last down 0.3 percent at 109.99. The euro slid 0.6 percent to 128.92 yen, and fell 0.1 percent against the dollar to $1.1735. South Korea's Kospi fell 0.5 percent.

"A combination of softer euro zone economic data, solid USA reports and market positioning all resulted in a markedly heavier tone for the single currency", Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, said in a note.

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