Escalating tensions around Pyongyang´s nuclear ambitions sent a shiver through markets worldwide and sent the dollar to an eight-week low against the safe haven yen below the 110 barrier, piling more pressure on Japanese stocks.
North Korea said it was considering plans to fire missiles at Guam, a USA -held Pacific island, after President Donald Trump on Tuesday warned the nuclear-armed nation that it would face "fire and fury" if it threatened the United States. The index has slid to its lowest intraday level in nearly eight months. Following Trump's remarks, North Korea on Wednesday said it was "carefully examining" plans for a missile attack on the U.S. Pacific territory of Guam, which is home to a large U.S. military base. US Defense Secretary Jim Mattis told Pyongyang it should stop any actions that would lead to the "end of its regime and the destruction of its people".
"It is a market that is beginning to encounter some major threats and of course the threat is geopolitical", said Peter Cardillo, chief market economist at First Standard Financial.
"There's uncertainty and caution as investors nervously eye the next foreign policy moves". US Secretary of State Rex Tillerson said he did not believe there was an imminent threat. The Dow Jones industrial average slid 36.64 points, or 0.2 percent, to 22,048.70.
"Japanese equities hadn't been rising much despite positive earnings results, so investors had started jumping at shadows, doubting whether they should really be holdings onto Japanese stocks". Euro Stoxx 50 index was down by 1.27 percent and CAC 40 lost 1.4 percent as investors turned cautious. The Russell 2000 index of smaller-company stocks picked up 1.69 points, or 0.1 percent, to 1,374.23.
The weakness on Wall Street reflects geopolitical concerns amid a continued increase in tensions between the United States and North Korea.
"Tensions are still high and not going away at the moment".
"Saber-rattling between two of the world's least predictable leaders caused a wave of risk aversion to wash over global markets, fueling demand for traditional safe harbors", said Joe Manimbo, senior market analyst at Western Union Business Solutions.
The Japanese yen hit an eight-week high against the USA dollar, and US -traded Nikkei stock futures dropped 2 percent to their lowest since mid May.
South Korea's KOSPI fell 1.8 percent to an 11-1/2-week low, but its losses for the week are a relatively modest 3.2 percent.
CURRENCIES: The dollar slipped to 109.48 yen from 109.85 late Wednesday. Japan is the world's biggest creditor country and there is an assumption that investors there will repatriate funds in a crisis.
Oil prices gained 60 cents to $50.16 US per barrel. The euro rose to $1.1824 from $1.1774.
Yields on core government debt fell. Copper fell 2 cents to $2.93 a pound. The 30-year Treasury bond rose 27/32 in price to yield 2.8252 percent, from 2.867 percent late on Tuesday. Humana rose $3.59, or 1.4 percent, to $253.81. Silver gained 47 cents, or 2.9 percent, to $16.86 an ounce.