North Korean Threats Rattle Global Markets

By Georgi Kantchev and Lucy Craymer Features Dow Jones Newswires

Global markets were down Friday after fresh threats from North Korea revived the geopolitical fears that engulfed markets earlier this month.

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The Stoxx Europe 600 fell 0.2% in the early minutes of trading, dragged down by falls in the financial and resources sectors. Bourses across Asia were also flashing red. On Wall Street, futures pointed to a 0.2% opening loss for the S&P 500.

North Korean Foreign Minister Ri Yong Ho said late Thursday in New York that the country may consider a nuclear test of "unprecedented scale" in the Pacific Ocean.

Those comments came after North Korean leader Kim Jong Un said he was considering the "highest level of hard-line countermeasure" in response to President Donald Trump's warning that the U.S. would annihilate North Korea if forced to defend itself or its allies.

This was likely causing investors to be "antsy heading into the weekend, " said Emmanuel Ng, an analyst at OCBC Bank.

Havens got a boost following the North Korean threats. The Japanese yen and the Swiss franc both advanced against the dollar, by 0.5% and 0.3% respectively, and gold rose 0.5%.

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The geopolitical tensions overshadowed investors' focus this week on the Federal Reserve's next moves. The central bank suggested Wednesday that it was open to the possibility of an interest-rate increase in December.

Weak inflation numbers in recent months had made some investors skeptical the Fed would raise rates again in 2017. But after the Fed meeting Wednesday, investors now see a 75% chance of a rate rise by the end of the year, according to Fed-fund futures tracked by CME Group.

On Friday, 10-year Treasury yields were down at 2.257% from 2.278% on Thursday, with yields moving inversely to prices. The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was down 0.2%.

Investors were also looking to a key speech on Brexit by U.K. Prime Minister Theresa May on Friday and the German election on Sunday.

In Japan, gains in the yen sent the Nikkei Stock Average down 0.3% as a stronger currency would hurt the country's key export stocks. Hong Kong's Hang Seng was down 0.7%, while in South Korea the Kospi fell 0.8%.

In commodities, Brent crude rose 0.2% to $56.21 a barrel ahead of a meeting by members of the Organization of the Petroleum Exporting Countries on Friday.

Write to Georgi Kantchev at georgi.kantchev@wsj.com and Lucy Craymer at Lucy.Craymer@wsj.com

(END) Dow Jones Newswires

September 22, 2017 03:49 ET (07:49 GMT)