North Korea talk drags stocks lower; gold, yen rise

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Nasdaq 100 e-minis were down 40.25 points, or 0.68 percent, on volume of 29,918 contracts.

Gains among technology companies helped snap a three-day losing streak for US stocks Friday, though the market ended with its worst weekly loss since March.

Commenting on the situation in markets, David Madden, senior market analyst at CMC Markets UK said: "The tension between the USA and North Korea is still dominating the news and it is looming over the financial markets".

North Korea claimed "only absolute force" can work on someone as "bereft of reason" as Trump and detailed plans to fire a salvo of missiles into waters around the US Pacific territory of Guam.

"While the U.S. President insists on ramping up the war of words, there is a decreasing chance of any diplomatic solution", Carnell said.

US Defence Secretary Jim Mattis, who often has emphasised the devastating costs of any conflict with North Korea, seemed to back up Trump's tone.

Some investors are on edge after U.S. President Donald Trump warned North Korea of "fire and fury".

"While the two nations are at loggerheads, it is going to be hard to imagine money flowing into stocks", said David Madden, market analyst at CMC Markets UK.

'Traders are on red alert as the mention of war has sent them running for cover. "Whether it is a credit crunch in China, policy error from the Fed, or fear of an over-valued US stock market, there are many reasons to maintain a balanced multi-asset portfolio that has exposure to defensive asset classes and currencies".

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Earlier, Pyongyang said it was ready to give Washington a "severe lesson" with its strategic nuclear force in response to any US military action.

The Dow Jones industrial average fell 36 points, or 0.2 percent, to 22,048. Regions Financial shed 23 cents, or 1.6 percent, to $14.07. Hong Kong's Hang Seng added 0.6 percent.

South Korea's won currency dropped 0.9 percent against the dollar to its lowest close since July 13. A weakness in the consumer discretionary, financials, and information technology sectors weighed on the market.

Raytheon, which manufactures Tomahawk cruise missiles jumped +2.57% while other defense contractors such as Lockheed Martin (+1.71%), Northrop Grumman (+1.22%) and L3 Tech (+1.99%) also saw gains.

Spot gold inched down 0.1% to $1,284.64 per ounce as of 11.46am, but was set for a weekly gain of over 2%. The precious metal miners benefited from the flight to safety, with bullion prices hitting near two-month highs on North Korean worries.

Markets are now awaiting USA consumer price data for July, due later in the session.

Orders fell 4.7 percent from the previous quarter in April-June, suggesting demand is weaker than expected, though economists say the outlook for coming months is more upbeat.

The department store chain reported earnings of $110 million, or 65 cents a share.

USA crude oil futures settled almost 2 per cent lower at $48.59 a barrel, as Russian Federation considered a future output resumption and the Organization of the Petroleum Exporting Countries boosted its July production numbers.

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