Trump and North Korea

Reuters

The stage was set for the US indexes to go lower early Wednesday as investors around the world reacted to the rising war of words between the USA and North Korea, pushing global market indexes lower.

Investors have been jittery about North Korea since Tuesday when Trump said any threats from Pyongyang would be "met with fire and fury like the world has never seen".

Simmering tensions between the U.S. and North Korea have come back to the boil in recent days after Pyongyang disclosed plans to fire missiles over Japan to land near America's Pacific territory of Guam.

In the US, major indexes closed slightly lower as investors digested geopolitical tensions, with the Dow Jones industrial average sliding 0.17 percent to close at 22,048.70.

Europe's other main indices were also in negative territory, with the Frankfurt Dax and Paris CAC 40 down by similar amounts, declining by 1.5% and 1.8% respectively.

Most South-east Asian stock markets closed lower too, as investors flocked instead to traditional safe-havens such as gold, the Japanese yen, and the bond market.

Benchmark 10-year notes last rose 5/32 in price to yield 2.2255 percent, from 2.242 percent late on Wednesday.

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At its worst, the FTSE 100 was down 121 points, or 1.6%, at around 3pm, also pressured by some companies going ex-dividend, and disappointing export and construction data.

Global political tensions have seen investors sell off shares as they flee to less risky assets such as the yen and the Swiss franc. The S&P hasn't moved more than 0.5 percent in one day since July and has fallen more than 1 percent only twice this year. "Yet given the military power of both nations, there is no surprise we are seeing markets shift out of risk assets".

KEEPING SCORE: The Standard & Poor's 500 index fell 3 points, or 0.1 percent, to 2,471 as of 12:16 p.m.

The dollar extended losses against the yen to hit a new two-month low. Economists had expected prices to rise by 0.2 percent.

Rising costs for housing, medical care and food helped push the Consumer Price Index (CPI) up 0.1 percent in July, seasonally adjusted, after no change in June and a 0.1 decrease in May, the US Labor Department said. The contract fell 97 cents, or 2 percent, to close at $48.59 a barrel on Thursday. After a very quiet start to the week due to the summer season, the second half has been dominated by geopolitics - with the mounting tensions between the United States and North Korea denting risk sentiment, ultimately punishing global stocks.

Australian financial services provider AMP reported half-yearly underlying profit increased 4 percent to A$533 million ($420 million) - higher than the A$514.5 million forecast in a Reuters poll. South Korea's won currency dropped 0.9% against the dollar.

US crude oil crude futures CLc1 were little changed at $48.59 per barrel. It is set for a weekly gain of 2.4 percent. Tokyo's Nikkei 225 tumbled 1.3 percent, while Seoul's Kospi fell 1.1 percent.

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