(AP Photo/Jacquelyn Martin)
WASHINGTON - Emerging market assets still felt yesterday the reverberations of the stand-off between Washington and Pyongyang, with stocks extending losses for a second day while currencies fared more mixed.

In a war of words between Washington and Pyongyang that has unnerved regional powers and global investors, North Korea dismissed as a “load of nonsense” warnings by US President Donald Trump that it would face “fire and fury” if it threatened the US.

And it outlined detailed plans for a missile strike near the Pacific territory of Guam. MSCI’s emerging market index - dominated by Asian heavyweight bourses such as South Korea and Taiwan - slipped 0.6%, having lost 1.5% since Trump’s comments.

Taiwan’s bourse tumbled 1.3%, Hong Kong’s Hang Seng lost 1.1% and South Korea’s Kospi dropped as much as 1.2% to a two-month low before trading 0.4% lower.

Gains elsewhere failed to offset the Asian losses. Turkey and Russia indexes gained 0.4% while South African stocks edged 0.1% higher.

Investors faced a dilemma in how to price the latest political tensions, said Koon Chow, FX strategist at UBP.

“Most investors will be completely out of their depth in making any assessment on the situation, therefore one shouldn’t make a big call on this,” he said.

Still, emerging markets would likely face a softer patch as long as the political tensions fuelled investors’ risk aversion, he said.

“The moment that shows some kind of abeyance, you will see emerging markets strengthen again,” he said, adding developing economies still faced a benign backdrop overall, thanks to little sign of monetary tightening by any of the major central banks.

Emerging currencies fared mixed against a slightly stronger dollar. The South Korean won weakened 0.3% and touched a four-week low, extending a sell-off from the previous two sessions.

However, South Africa’s rand firmed 0.4%, recovering from the four-week low it hit after President Jacob Zuma survived a no-confidence vote.

Russia’s rouble gained 0.3%, lifted by oil prices.

The Philippine central bank left its benchmark interest rate unchanged as expected, with inflation not a concern, even as the economy expands at a solid pace this year.