United Kingdom stocks finished sharply lower on Friday, as escalating tensions between the USA and North Korea helped drive a global selloff and left British blue-chips with their worst weekly performance in almost four months.
North Korea said it was considering plans to fire missiles at Guam, a US-held Pacific island, after President Trump's warning on Tuesday. It has been the leading S&P gainer so far this year, making it particularly vulnerable to a decline.
The Labor Department said its consumer price index inched up by 0.1% in July after coming in unchanged in June.
If the North Korean regime "does anything" to the United States or a USA ally "things will happen to them like they never thought possible", he told reporters on Thursday, according to Bloomberg.
The rhetoric between the USA and North Korea has continued to heat up, leading traders to look to safe havens such as gold and treasuries.
The latest tensions began after US President Donald Trump on Tuesday warned North Korea that it would face "fire and fury" if it threatened the United States.
"Geopolitical tensions are the main focus: the S&P 500 was down 1.5 percent last night and many investors are becoming risk averse".
Additionally, China weighed in on the standoff, saying in an editorial in state-run Global Times (http://www.globaltimes.cn/content/1060791.shtml) that Beijing will intervene if the US strikes first against North Korea.
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The S&P is trading near its most expensive valuation level since 2004, as measured by the price-to-12-month forward earnings ratio.
The dollar was further weighed on Friday by the soft USA inflation data. Discovery Communications fell 70 cents, or 2.9 percent, to $23.60.
"Today's inflation data put the Fed on pause and really diminishes the fact that there's still some noise going around with the North Korea-U.S. situation", said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
Biotechnology, tobacco, and transportation stocks also saw considerable strength, while steel stocks extended a recent move to the downside.
The bond market was without direction: the yield of u.s. Treasury bills to 10 years, which evolves to the inverse of the bond price, appears to 2,190 %, compared to 2,198 % Thursday evening, and that bills to 30 years at 2,786 %, compared to 2,773 %. Brent crude, used to price global oils, gained 56 cents to $52.70 in London.
The pan-European FTSEurofirst 300 index lost 1.01 percent and MSCI's gauge of stocks across the globe shed 0.12 percent. Travel-review website operator TripAdvisor was down 2.7 per cent.
The dollar slipped to 109.04 yen from 109.26 late Thursday. The index bounced off its lowest closing level in six months. South Korea's Kospi lost 1.7 percent, while Hong Kong's Hang Seng slid 2 percent.
The CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the election.