Economy

TSX falls as North Korea tensions spur flight to safety

TSX falls as North Korea tensions spur flight to safety

US equities steepened their losses late in the session after President Donald Trump said his earlier warnings to North Korea may not have been tough enough. Trump's comments followed reports the North has mastered a technology needed to strike the United States with a nuclear missile.

Developments regarding the situation with North Korea may remain in focus next week, although traders are also likely to keep an eye on reports on retail sales, housing starts, and industrial production.

"With European, U.S. and Asian markets all suffering heavily in anticipation of a potential conflict in Asia, it is worthwhile noting that we have heard similar posturing between Trump and Kim Jong Un before", said Mahony. The Japanese market was closed in observance of the Mountain Day holiday.

Wall Street saw a stock sell-off on Thursday as rising tensions between the USA and North Korea filled investors with worry.

The index's losses mirrored global markets, which fell after incendiary words between the United States and North Korea.

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The fall of the S&P 500 has been higher, at 1.5 %, most felt still for the Nasdaq, technology stocks losing 2.1% on the session. It is now on track for its biggest weekly drop since the week before the November 8 U.S. presidential election.

Investors instead turned to safe-haven assets such as gold, pushing it to a two-month high, and the Japanese yen rose. The US currency was down 0.3 per cent at 109.94 yen, following a retreat to 109.740, its weakest since June 15.

The greenback also came under pressure after New York Federal Reserve President William Dudley cautioned it would "take some time" for USA inflation to reach the bank's two percent target, the latest warning price pressures remain muted.

The tension and severity of the potential consequences of further escalation have effected equities, thereby making the safe-haven of gold attractive to investors.

Elsewhere in commodities, the September crude contract was up 39 cents to US$49.56 per barrel, September natural gas advanced six cents at US$2.88 per mmBTU and the September copper contract declined two cents at US$2.93 a pound.

Disappointing US inflation and jobs data have not helped the dollar.

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The Labor Department said its producer price index for final demand edged down by 0.1 percent in July after inching up by 0.1 percent in June.

Computer hardware stocks rebounded following recent weakness, with the NYSE Arca Computer Hardware Index climbing by 1.4 percent. It soared over 2 percent in the previous two sessions, and is set for a weekly gain of 2.25 percent.

The Korean won also continued to fall, down 0.45 percent to 1,147.2. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index fell around 1.2% each to finish at 5,693.10 and 5,743.50, respectively.

Australian stock futures dropped 1.2 percent and New Zealand stocks slid 1.1 percent.

"Both (PPI measures) were well below consensus and give us no hope that consumer price inflation is going to materially beat expectations", said Chris Weston, chief market strategist at IG Markets.

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Markets saw a tentative recovery in risk appetite in overnight US and early Asian trading, but anxiety mounted again as Asian stocks fell back and London, Frankfurt and Paris dropped 0.5-1.2 percent in Europe.