TSX hits 1-month low on risk aversion, lower oil prices

By Saqib Iqbal Ahmed

Stock markets nosedived as investors continued moving into gold amid escalating political tensions between the United States and North Korea.

A statement from the North Korean military called President Donald Trump's warning that the communist nation would face "fire and fury" if it continued its provocations a "load of nonsense".

The benchmark S&P 500 index tumbled more than 1 percent on Thursday, only the third time this year it has fallen that much, while the Nasdaq shed more than 2 percent.

Australian shares were down 1.3 percent, set for a weekly loss of 0.6 percent and Chinese and Hong Kong bluechips lost 1.6 percent and 1.9 percent respectively. Japanese markets were closed for a holiday.

On Thursday, Federal Reserve Bank of New York President William Dudley offered a positive outlook for the US economy, job market and inflation, saying better conditions would help support the most vulnerable Americans. "That reset is being triggered by North Korea geopolitical concern and stretched valuations", said Peter Kenny, senior market strategist at Global Markets Advisory Group in NY.

Korea's Samsung Electronics fell 2.8% Friday and was down 6.1% on the week.

Cracks are showing in what has been a virtually non-stop US equity rally after a rapid escalation of tension between North Korea and the United States this week.

USA stocks deepened their losses following the latest Trump comments, and the S&P 500 volatility index, known unofficially as the "fear index", rose decisively. The index closed at 16.04 overnight, the highest level since November 8, when Trump was elected president.

In New York, the Dow Jones industrial average plunged 204.69 points to 21,844.01.

US stock futures were marginally softer on Friday. "I do think we could see markets pull back between 1 and 5 percent".

Wall Street's fear gauge - the CBOE Volatility Index or the VIX - surged 44%, its second-biggest one-day jump of the year. Core prices had been expected to rise by 0.2 percent.

The precious metal is often seen as a safe haven for investors during times of uncertainty.

"The level which we are looking at now is $1,300".

Subdued U.S. inflation has stirred doubts about the chances of another Fed interest rate hike this year, which have weighed on the dollar. The index has fallen to its lowest intraday level in nearly a month.

Nevsun Resources Ltd offset some of the material group's gains, plunging 16.4 percent to C$2.75 after the company reported disappointing quarterly results.

Stocks ended more than one per cent down in Seoul while the won slumped to a three-week low against the dollar as the USA president and South Korea's volatile neighbour dramatically ramped up their war of words.

Data showed the number of Americans filing for unemployment benefits unexpectedly rose last week, but the underlying trend remained consistent with a tightening labor market.

Markets are now focused on US consumer price data for July, due later in the session.

Investors again sought safe-haven assets such as gold and the Swiss franc, helping gold hit a more two-month high. With the drop on the day, the major averages are adding to the losses posted in the two previous sessions.

USA crude futures extended losses from Thursday, when they plunged 2 percent on fears of slowing demand and lingering concerns over a global oversupply. It is poised to end the week down 1.9 percent.

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