US stocks slip, treasuries gain on Korea tension

Cape Town - US stocks fell a second day, while Treasuries gained with gold and the yen as investors reached for safe haven assets after North Korea ratcheted up its threats against the US. 

The S&P 500 Index headed for a weekly decline and the dollar fell the most in two weeks after North Korea’s leader promised retaliation against the US, which could mean testing a hydrogen bomb in the Pacific Ocean.

The euro rallied after strong economic data lifted sentiment before German voters head for the polls on Sunday. The rout in base metals deepened and crude’s rally stalled above $50 a barrel as OPEC members gathered in Vienna.

Manufacturing PMIs from Germany and France and a composite eurozone private-sector activity index provided support for European policy makers as they consider scaling back stimulus. Even so, the focus on monetary-policy that has dominated market attention this week now looks under threat as fears about North Korea surface yet again.

Elsewhere, UK Prime Minister Theresa May is set to give a key speech on her Brexit strategy in Florence. And Germany goes to the polls on Sunday, with Chancellor Angela Merkel expected to secure a fourth term, although she may not win an outright majority.

What to watch out as the week comes to an end:

• The UK will pay into the EU until 2020, Theresa May will say in a landmark speech in Florence, a person familiar said. Angela Merkel is poised to win a fourth term as German Chancellor on Sunday, but may not get an overall majority with her existing partners.

OPEC meets in Vienna today. There’s mixed signals on whether they’ll discuss deeper or longer cuts.. New Zealand heads to the polls on Saturday.

Here are the main moves in markets:

Stocks

• The S&P 500 fell 0.1% at 9:31 in New York.

• The Stoxx Europe 600 Index advanced 0.1% to the highest in two months.

• The UK’s FTSE 100 Index increased 0.1%. 

• The MSCI All-Country World Index fell less than 0.1%.

Currencies

• The Bloomberg Dollar Spot Index declined 0.3%, the biggest drop in more than two weeks. 

• The euro advanced 0.2% to $1.1968. 

• The British pound declined 0.1% to $1.3565. 

• The Japanese yen advanced 0.3% to 112.11 per dollar, the first advance in more than a week.

Bonds

• The yield on 10-year Treasuries fell two basis points to 2.26%, the first retreat in more than a week. 

• Germany’s 10-year yield advanced less than one basis point to 0.46%. 

• Britain’s 10-year yield declined less than one basis point to 1.375%.

Commodities

• West Texas Intermediate crude decreased 0.5% to $50.31 a barrel. 

• Gold advanced 0.2% to $1 293.93 an ounce. 

• Copper declined 0.2% to $2.93 a pound, the lowest in more than five weeks.

Asia

• Japan’s Topix index fell 0.3% at the close in Tokyo and South Korea’s Kospi index slid 0.7%.

• Australia’s S&P/ASX 200 Index added 0.5%.

• Hong Kong’s Hang Seng Index lost 0.8% and the Shanghai Composite Index dropped 0.2%.

• Taiwan’s Taiex index fell 1.2%, the biggest slide in Asia.

• The MSCI Asia Pacific Index declined 0.2%.

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