ASX winners and losers
![JEss sier](http://web.archive.org./web/20170813204620im_/http://www.afr.com/content/dam/images/g/x/r/f/6/p/image.imgtype.afrAuthorAvatar.120x120.png/1502149554585.png)
The escalating war of words between the United States and North Korea weighed heavily on the ASX on Friday with the benchmark index sliding below 5700 points in a broad-based $20 billion selloff.
Investors took their cue from Wall Street, which posted its biggest loss in three months on Thursday night, and flooded into safe haven assets, such as gold and bonds.
On the local market, consumer discretionary and utilities stocks were the most savagely sold off this week while telecommunications and technology stocks managed to finished the week in the green.
The benchmark S&P;/ASX 200 Index and the broader All Ordinaries Index each finished Friday down 1.2 per cent to 5693.1 points and 5743.5 points respectively. Over the week both indices were off 0.5 per cent.
![](http://web.archive.org./web/20170813204620/http://www.afr.com/content/dam/images/g/x/u/l/l/0/image.imgtype.afrArticleInline.620x0.png/1502437608527.png)
"You can never discount the risk of bombing or war and the market is appropriately spooked by that," said Kerry Craig, market strategist at JP Morgan Asset Management.
"And there is broadbased selling definitely fuelled by fear, but there's also a bit of a northern summer lull where a vacuum of information means these geopolitical headlines are heard extra loudly by investors."
Pointing to the dramatic falls in US tech stocks and financials, Mr Craig suggests much of selloff was taking place in already crowded trades.
Locally, gold stocks performed well, rising along with the gold price. Newcrest Mining, Australia's largest gold producer was up 7.4 per cent for the week, while Evolution Mining enjoyed a 5.9 per cent lift and St Barbara was up 1.7 per cent.
Commonwealth Bank dominated headlines this week, after Austrac announced it was investigating Australia's largest bank for failing to properly enforce its know-your-customer and money laundering practices.
![](http://web.archive.org./web/20170813204620/http://www.afr.com/content/dam/images/g/x/u/l/m/7/image.imgtype.afrArticleInline.620x0.png/1502437608449.png)
Despite the negative attention, the bank posted a $9.9 billion profit, which saw investors who had dumped the stock early in the week, pile back in on Tuesday.
However over the week the bank was down 0.3 per cent and ANZ was off 0.8 per cent, while Westpac was up 0.2 per cent and National Australia Bank closed the week up 0.8 per cent.
Following a 5 per ent slide in Chinese iron ore futures on Friday, resources giants BHP Billiton and Rio Tinto slumped 1.9 per cent and 2.8 per cent respectively, and were down 0.7 per cent and 3.2 per cent for the week.
Among the biggest losers of the week were companies whose earnings disappointed, including Mayne Pharma, down 10.1 per cent and Crown Resorts, which dropped 7.3 per cent.
Meanwhile, Carsales was one of the better performers, rising 6.2 per cent following its earnings report.
Stock Watch: REA Group
Shares in the property listings company slumped 5.9 per cent on Friday to $64.35 after the company announced full-year statutory net profit had fallen 12 per cent to $206.3 million. Investors were also unimpressed that management's FY 2018 outlook advised that operating expense growth would exceed revenue growth in some quarters. Weakness in Asian property markets were the main culprit for the poor result, which was down 19 per cent from its 2016 profit of $252 million. The company, controlled by Rupert Murdoch's News Corporation, said revenue in its Australian business grew 14 per cent and net profit jumped 12 per cent to $228 million.
Market movers
Aussie dollar
The Australian dollar slipped further on Friday as the escalating war of words over North Korea spooked investors towards safe harbours including the yen and Swiss franc. With stocks and equities falling across Asia and volatility on the rise, funds pared back riskier positions in carry trades which typically favour the higher-yielding Antipodeans. The Aussie lost 0.4 per cent on its US counterpart to stand at US78.52¢, bringing its loss for the week to about 1 per cent. It was down 2.6 per cent on the week against the Swiss franc and 2.5 per cent on the yen.
Gold rush
The price of gold rose on Friday for the third straight day, reaching a two-month high as another exchange of threats by the United States and North Korea prompted investors to buy bullion as a safe-haven asset. The spot gold price had gained 2.1 per cent over the week to $US1285.1 an ounce, after reaching its highest level since June 8 at $1,287.73. Another source of support to bullion was data showing US producer prices unexpectedly fell in July,
Volatility lives
The Vix volatility index jumped above the 15 per cent mark for the first time since late June, as the US S&P; 500 flirted with the possibility of the first 1 per cent drop since May. Despite geopolitical shocks around the world, tightening monetary policy and concerns around the global economic recovery the index has hit all-time lows this year. The Vix has climbed for three straight days, and on Thursday night jumped above the 15 per cent mark for the first time since June 29, as the S&P; 500 has dipped 0.9 per cent.
Earnings outlook
The first consensus earnings growth estimate for financial year 2020 is in and at +6.8 per cent it would be the lowest initial read since 2011. "History shows an average 4 percentage point decline in the final delivery, meaning that in the absence of a meaningful up-tick, valuations may lack the earnings they currently demand," Morgan Stanley equity strategist Chris Nicol said. Analysts have been fretting about high valuation of the local sharemarket, which would, over time, only be justified if earnings rose stronger.