The S&P 500 index had its biggest one-day drop in nearly three months on Thursday as investors fled riskier assets, with technology stocks leading the charge, in response to an increasingly aggressive exchange of threats between the United States and North Korea.
Indices in Europe and Asia slipped as investors searched for safe havens after President Trump escalated his war of words with North Korea.
The sell-off is likely to extend into the European session today, with financial spreadbetter CMC Markets expecting Germany's DAX and France's CAC 40 to open down about 0.7% each and Britain's FTSE 100 to start 0.55% lower. According to the Associated Press, South Korea's Kospi lost 1.7 percent, while Hong Kong's Hang Seng slid 2 percent.
Gold surged by Rs 30 to Rs 30,050 per ten gram at the bullion market today on the back of mounting tension between the USA and North Korea, and persistent buying by local jewellers.
Johannesburg/London - Gold prices climbed to two-month highs on Friday as investors sought refuge from escalating tensions between North Korea and the United States, while bullion also received support from weak USA inflation data.
Investors have also headed to other traditional havens, such as the Swiss franc and the Japanese yen.
Major European markets sank in early trade Thursday after the Dow recorded its second straight negative close Wednesday, although the dollar firmed against the pound and euro ahead of U.S. inflation data Friday.
"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. On Tuesday, August 8, despite that new record high, the market pulled back and closed lower due to decreased risk appetite.
Thursday's selling in the USA extended to global markets Friday.
The Dow and S&P 500 inched higher on the day but they both posted their largest weekly percentage drops since late March.
This increase in tension between the USA and North Korea seem to be affecting the oil prices as well as they have dropped through the $49 region and now trade just above the $48 region as of this writing and continues to look weak.
In bond markets, the yield on U.S. Treasuries fell, also pressured by the lowered expectations for a Fed move. Traders there were also digesting a rise in jobless claims and the biggest drop in producer prices in 11 months. Spot gold was up 0.1% at $1,287 per ounce by 2.17pm GMT, set for its biggest weekly gain since April.
An editorial in China's state-run Global Times (http://www.globaltimes.cn/content/1060791.shtml), published late Thursday local time, added to the pressure on Asian markets.
Benchmark U.S. crude rose 23 cents to settle at $48.82 a barrel on the on the New York Mercantile Exchange.