Investors instead turned to safe-haven assets such as gold, pushing it to a two-month high, and the Japanese yen rose. The pan-European STOXX 600 hit its lowest level since the end of March, down 1.1%.
Additionally, China weighed in on the standoff, saying in an editorial in state-run Global Times (http://www.globaltimes.cn/content/1060791.shtml) that Beijing will intervene if the USA strikes first against North Korea. Falls of just 0.3% were recorded by both the Dow Jones industrial average and the more broad-based S&P 500 in early trading.
Nervous trading marked the 10th anniversary of the start of the financial crisis on Wednesday, after Donald Trump's warning that North Korea faced "fire and fury like the world has never seen" if it continued to make threats against the US.
'Stock markets in Europe are still under pressure because of the heightened tensions surrounding North Korea, ' said David Madden, market analyst at CMC Markets UK.
Korea said it is examining an operational plan for firing a ballistic missile towards Guam. We can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit, so if you don't have 5-10 per cent of your assets in gold as a hedge, we'd suggest that you relook at this.
Japanese markets were closed for a holiday, but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe posted its largest weekly drop since the week before Donald Trump won the U.S. presidential election in November.
Later on Friday, investors will look to US July consumer price data for hints on the Fed's policy outlook and near-term moves in the dollar.
If the North Korean regime "does anything" to the U.S. or a United States ally "things will happen to them like they never thought possible", he told reporters on Thursday, according to Bloomberg. On the Nasdaq, 1,846 issues fell and 953 advanced favoring decliners.
KOREAN STOCKS: Investors didn't panic but saw Trump's comments as a chance to take profits, said Seo Sang Young, a market strategist at Kiwoom Securities in Seoul.
The utilities index .SPLRCU , often seen as a bond proxy because of its companies' slow reliable growth and high dividends, was the only S&P sector that ended the day up, showing a 0.25 percent gain.
North Korea has said it may attack Guam in retaliation. On commodities markets, oil advanced with United States crude nearing $50 a barrel after figures from industry group the American Petroleum Institute showed a sharp decrease in stockpiles, a clear indication of the easing supply glut.
ENERGY: Benchmark U.S. crude gained 28 cents to $49.84 a barrel in electronic trading on the New York Mercantile Exchange.