USA stocks end three-day losing streak after rollercoaster week

U.S. Dollar Index

U.S. Dollar Index

That's a much steeper drop than the ones experienced by the Dow and S&P 500. Investors welcomed new data showing US inflation at the consumer level inched higher last month, suggesting that the Federal Reserve may be less likely to raise interest rates next month. Even so, the close was the highest in a month.

U.S. President Donald Trump on Thursday warned Pyongyang again, saying his previous promise to unleash "fire and fury" may not have been strong enough after North Korea responded with a threat to fire missiles over Japan to land near the U.S. Pacific territory of Guam. UBS said in a note it had increased its long position in gold as forward real interest rates declined and commodity prices increased, while it also added to longs in the platinum group metals as investment demand rose.

"It's unbelievable when you consider the headlines just how calm the equity markets are, how they've taken things in their stride", said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. This will give a hint on whether the inflation continues to build, which will help the Fed to hike rates, or whether the recovery in the U.S. economy, as evidenced in the strong NFP report from last week, was just a flash in the pan and this could then determine the short term direction for gold.

By the close of trading, the FTSE 100 was down 84.46 points, or 1.1%, to 7,305.48, having dropped 1.4% on Thursday.

The S&P 500 is down 38.62 points, or 1.6 percent. The stock fell 85 cents to $12.76.

FINANCIALS FALLING: Several financial sector companies also helped pull down the market.

Kathleen Brooks, research director at City Index Direct, said: "The Swiss franc is the safe haven of choice today as risk sentiment gets hit from escalating nuclear fears between the United States and North Korea".

Stock markets in Europe are still under pressure because of the heightened tensions surrounding North Korea. "Safe-havens are bid and markets are a little uneasy". Traders would require nerves of steel to starting buying into the stock market now, given standoff between the U.S. and North Korea. The Russell 2000 index of smaller-company stocks slipped less than 1 point to 1,371.

The dollar was further weighed on Friday by the soft USA inflation data.

The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors will repatriate funds should a crisis materialize. These have ranged from an investigation into Russia's possible interference in the 2016 USA presidential election, to concerns about China's risky debt levels, to stubbornly low inflation in the US.

Housebuilders Persimmon and Barratt Developments were among the biggest gainers of the day, up 1.58% and 1.02% respectively.

The yield on the 10-year Treasury bond fell to 2.2% and is approaching its lowest level of the year. Markets were primed for something slightly more dovish, so the NZD rose a third of a cent and the two-year swap rate rose two basis points.

Simmering tensions between the US and North Korea continued to weigh on investors. Oil prices were headed higher. Brent crude, the worldwide standard, lost 23 cents to $52.14 a barrel in London. That is significant because yields fall when bond prices rise.

Spot gold had eased 0.1 per cent to $1,276.40 per ounce at 0322 GMT.

Kohl's, another department store chain, slumped 8.9 percent after reporting that second-quarter sales dipped 0.9 percent compared with the year-ago period.

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