In other words, investors are dumping stocks and buying bonds, which many view as a safe haven in times of turmoil.
President Trump took aim at North Korea again on Thursday, saying that his earlier threat to unleash "fire and fury" may not have gone far enough.
South Korea's KOSPI fell 1.8 percent to a 9 1/2-week low, taking its losses this week to almost 2.7 percent.
Trump was responding to North Korea's claim it was completing plans to fire four intermediate-range missiles over Japan to land near the U.S. Pacific territory of Guam.
Asian markets lower: Tokyo's Nikkei shed 1.3 per cent, Hong Kong's Hang Seng lost 0.4 per cent, and China's Shanghai Composite fell 0.2 per cent.
More than 430 stocks from all United States exchanges hit their lowest levels in 52 weeks or more yesterday, the most for any session since mid-November right after Trump was elected.
"It's a clear case of "risk-off" sentiment lifting the yen, as investors focus on the latest developments with North Korea", said Kumiko Ishikawa, FX market analyst at Sony Financial Holdings in Tokyo.
The S&P is trading near its most expensive valuation level since 2004, as measured by the price-to-12-month forward earnings ratio.
"We're not very oversold yet so the market still has more downside left to it".
The market slide accelerated slightly in the last half-hour of trading as President Donald Trump denounced North Korea's nuclear program.
It is now on track for its biggest weekly drop since the week before the November 8 US presidential election.
The S&P/TSX composite index was down 39.02 points to 15,217.33, with most sectors finishing in the red while bullion stocks surged almost 1.9 per cent.
The market's backstop safety asset, gold, edged up to its latest two-month high of $1,288 an ounce.
The dollar held steady at 110.02 yen, having pulled up from Wednesday's low of 109.56 yen, its lowest level since June 15. It is heading for a 2.5 percent drop for the week. -North Korea tension also weighed on the Canadian dollar, which weakened against its USA counterpart, despite higher oil prices and stronger-than-expected domestic housing data.
Global benchmark Brent also fell 0.9 per cent to $51.44, after Thursday's 1.5 per cent drop.
The dollar weakened after news that US producer prices unexpectedly fell in July, recording their biggest drop in almost a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.
The Nasdaq added 39.68 points, or 0.6 percent, to 6,256.56.
The Federal Reserve's hint about unwinding balance sheets, the possibility of the European Central Bank tapering stimulus and the looming debate about the US debt ceiling in the fall challenge the market's recent performance, Mr. Baele said.
European bourses also looked set to open lower across the board, with Eurostoxx 50 futures already down 0.7 percent in early trade. Netflix lost 1.5 per cent.
In commodities trading, USA crude oil was wallowing around $49 to the barrel amid speculation that a predicted gain in American output will offset OPEC-led efforts to trim a global glut.