Trump warned North Korea again on Thursday not to strike Guam or USA allies, saying his earlier threat to unleash "fire and fury" on Pyongyang if it launched an attack may not have been tough enough. Thursday's producer-price index came out tepid, analysts said.
The Korean won also continued to skid, down 0.45 percent to 1,147.2, falling below its 200-day moving average for the first time in a month.
And, on the afternoon of Friday, August 11 we hear Trump say a military solution might be sought to deal with North Korea.
The S&P 500 is up 8% since January, the Dow is up nearly 10% and the Nasdaq by more than 15%. "North Korea responding with a threat to US territory after Trump warned them not to threaten the USA was never going to go down well", Lawler said.
"Traders should closely watch global equities today, with further falls and risk aversion likely pumping more safe-haven flows into precious metals", said Jeffrey Halley, a senior market analyst at OANDA.
US gold futures for December delivery rose 0.2 percent to $1,291.80 per ounce. "There are four more (inflation) prints between now and the December FOMC meeting and we expect the Fed to remain data-dependent, if a touch more cautious", TD Securities said in a note.
US crude was down 0.9 percent at $48.16 per barrel, on track for a weekly loss of 2.9 percent. Tokyo's Nikkei 225 share index closed down 1.3% at its lowest since June 1 as the strong yen hit exporters, while South Korea's KOSPI index fell 1.1% to seven-week lows. The Shanghai Composite Index lost 0.2 percent to 3,275.01 and Hong Kong's Hang Seng was off 0.8 percent at 27,629.68.
The 30-year bond last /32 in price to yield 2.7933 percent, from 2.794 percent late on Thursday. The Nasdaq lost 135 points, or 2.1 percent, to 6,216.
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 take place.
Instead, investors turned to the traditional safe-haven assets sought in troubled times, the Japanese yen strengthened 0.5 per cent to 109.73 to the dollar, an eight-week high, and the Swiss franc reversed a two-week losing streak and gained almost 1 per cent to 0.9650 per dollar. Consumer-focused companies and banks were among the biggest decliners.
United States producer prices Thursday disappointed, as traders await consumer price inflation figures later Friday.
The Japanese yen strengthened by 0.5% to about 109.70 per dollar. The euro fell to $1.1735 from $1.1752.
Benchmark US 10-year notes last rose 6/32 in price to yield 2.1905 per cent, from 2.211 per cent late on Thursday. Brent crude, used to price global oils, added 21 cents to $52.91.