World markets slide as US-North Korea tensions grow


11 Aug, 2017

World markets slide as US-North Korea tensions grow

Global markets are feeling the pinch as the US and North Korea continue to trade threats with one another.

In the latest twist to the US and North Korea saga, President Donald Trump has issued a new round of fiery rhetoric, warning Pyongyang against attacking near Guam or any US allies.

He said "If North Korea does anything in terms of even thinking about an attack on anybody that we love or represent, or our allies or us, they should be very, very nervous.

"Let's see what he does with Guam. If he does something in Guam it will be an event the likes of which nobody's seen before, what will happen in North Korea".

His comments came after North Korea disclosed plans to fire missiles over Japan to land near the US Pacific territory of Guam.

The continued back-and-fourth between the two leaders has created unease in global markets. Wall Street closed sharply lower following President Trump's latest comments. The sell-off is likely to extend into the European session, with financial spreadbetter CMC Markets expecting Germany's DAX and France's CAC 40 to open down about 0.7% each.

On Thursday, the UK's FTSE 100 fell by more than 100 points, down 1.44% to close at 7389.94 - its worst performance in four months. It's expected to recover slightly on Friday but will start the session at 0.55% lower.

Elsewhere, MSCI's broadest index of Asia-Pacific shares outside Japan skidded 1.55%, its biggest one-day loss since mid-December. It is heading for a 2.5% drop for the week. Japanese markets were closed for a holiday.

"What has changed this time is that the scary threats and war of words between the U.S. and North Korea have intensified to the point that markets can't ignore it," said Shane Oliver, head of investment strategy at AMP Capital in Sydney.

"Of course, it's all come at a time when share markets are due for a correction so North Korea has provided a perfect trigger".

South Korea's KOSPI fell 1.8% to an 11-1/2-week low, taking its losses this week to 3.2%. The Korean won also continued to skid, down 0.45% to 1,147.2, falling below its 200-day moving average for the first time in a month.

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