On Thursday, the three major USA indexes logged their worst performances since mid-May (http://www.marketwatch.com/story/us-stocks-set-up-for-another-day-of-losses-as-north-korean-tensions-simmer-2017-08-10) in a session dogged by escalating tension between the us and North Korea.
Sentiment is expected to remain downbeat in today's trading, amid the ongoing summer lull and after the Dow posted its worst drop since May after President Donald Trump doubled down on his remarks from earlier this week that North Korea would face "fire and fury".
U.K.'s FTSE 100, the German DAX and the French CAC 40 all dropped more than 2.3% this week.
South Korea's KOSPI .ks11 fell 1.7 percent on Friday to its lowest level since May 24, but its losses for the week are a relatively modest 3.2 percent.
The modest rebound came at the end of a turbulent week on Wall Street as escalating tensions between the US and North Korea rattled global markets. "You're less than 2 per cent off the high for the S&P heading into a weekend where uncertainty with North Korea still lingers".
Investors instead turned to safe-haven assets such as gold, pushing it to a two-month high, and the Japanese yen rose.
The Swiss franc and Japanese yen are often sought in times of geopolitical tension or global financial stress, partly because both countries have big current account surpluses.
Euro zone stocks and blue-chips also dropped 0.9 per cent.
Many markets have recently climbed to record or multi-year highs, leaving them vulnerable to a sell-off. On Tuesday, August 8, despite that new record high, the market pulled back and closed lower due to decreased risk appetite. MSCI's broadest index of Asia-Pacific shares outside Japan .miapj0000pus closed 1.37 percent lower.
The market also awaited U.S. consumer inflation data on Friday that would offer more clues about the pace of the U.S. Federal Reserve's monetary tightening. In Australia, the S&P/ASX 200 was down 1.13%.
It all led to a loss of mojo for the Australian dollar, which slipped below 79 cents against the United States dollar in afternoon trade. It is set for a weekly gain of 2.4 percent.
United States producer prices unexpectedly recorded their biggest drop in almost a year, and the number of Americans filing for unemployment benefits unexpectedly rose last week.
Benchmark 10-year notes last rose 5/32 in price to yield 2.2255 per cent, from 2.242 per cent late on Wednesday.
It makes sense that investors would start to cut their positions in some of their winners and look for other investments that might be better bets for a rockier period for the markets and global economy.
USA crude rose 0.41 per cent to US$48.79 per barrel and Brent was last at US$52.01, up 0.21 per cent.