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European and U.S. equity-index futures dropped with stocks in Asia as North Korea ratcheted up its threats against the U.S. by suggesting retaliation may include testing a hydrogen bomb in the Pacific. Safe havens including the yen and gold advanced.
After a flat start to Friday’s Asia session, equities declined in most of the region. Hong Kong shares slid as S&P Global Ratings cut the city’s sovereign rating a day after it downgraded China. Bond yields retreated after Yonhap News cited a North Korean official saying the “highest level of hard-line” countermeasures against the U.S. could refer to a hydrogen-bomb in the Pacific Ocean. North Korea’s nuclear tests up to now have taken place on its own soil. The euro and Swiss franc advanced while the rout in base metals deepened.
The fresh threats diverted attention from the monetary-policy decisions that have dominated markets’ focus this week. Investors are keeping an eye on speeches by Federal Reserve officials that may offer further clues to the central bank’s thinking after bets for higher rates by year-end were raised following this week’s policy meeting.
Attention also turns to events in Europe with U.K. Prime Minister Theresa May set to give a key speech on her Brexit strategy on Friday in Florence. 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:
Here are the main moves in markets:
Stocks
Currencies
Bonds
Commodities
Source: Bloomberg
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