Stocks across Asia tumbled early Friday with Europe following suit – extending a multi-day selloff in the face of rising tensions between the U.S. and North Korea.
After booking their worst week since March, indices from Hong Kong to London followed the S&P 500 into the meat grinder while the VIX spiked over 40 percent – the most since May.
South Korean stocks dropped along with the Won after President Trump tripled down on his warning to North Korea over their threat to fire four ICBMs at Guam, hitting it with ‘enveloping fire.’
In response to increased tensions, gold hit a nine week high, Treasuries strengthened, and the yen pushed through 109.
Upcoming events and market movers [via Bloomberg]
- Friday’s CPI data in the U.S. will get close attention following an unexpected drop in wholesale prices in July. New York Fed President William Dudley cautioned that it will “take some time” for inflation to reach the central bank’s 2 percent target, the latest official warning that price pressures remain muted. The producer-price index fell 0.1 percent last month, the first decrease in almost a year.
- Reserve Bank of Australia governor Philip Lowe gave a testimony before the House of Representatives Economics Committee on Friday and said interest rates are more likely to rise, though not for a while.
Here are the main moves in markets:
Stocks
- Australia’s S&P/ASX 200 Index fell 1.3 percent as of 2:40 p.m. in Sydney. The Hang Seng Index in Hong Kong tumbled 1.9 percent and China’s Shanghai Composite Index was down 1.6 percent.
- South Korea’s Kospi index lost 1.6 percent and volatility on the Kospi 200 surged as much as 27 percent.
- Contracts on the S&P 500 Index lost less than 0.1 percent and Nasdaq 100 futures declined 0.3 percent. The S&P 500 declined 1.5 percent on Thursday for its steepest slide since May 17 and the lowest close since July 11.
- The VIX rose 44 percent to 16.04, it’s highest closing price of Trump’s presidency.
Currencies
- The won weakened 0.5 percent against the dollar, set for the worst weekly decline since March.
- The yen rose 0.2 percent to 108.98, advancing to the strongest in eight weeks.
- The Bloomberg Dollar Spot Index was little changed after falling 0.1 percent on Thursday.
- The euro was at $1.1776 after climbing 0.1 percent in the previous session.
- The Aussie slid 0.4 percent to 78.47 U.S. cents.
Bonds
- The yield on 10-year Treasuries declined five basis points to 2.20 percent on Thursday, with trading limited until London opens due to the Japan holiday.
- Australian 10-year government notes saw yields drop eight basis points to 2.58 percent.
Commodities
- West Texas Intermediate crude declined 0.9 percent to $48.15 a barrel in early Friday trading after falling 2 percent Thursday.
- Gold traded at $1,285.82 an ounce and is up 2.2 percent this week.
Notwithstanding all the hoopla around NK, markets were relatively calm.