'The tension between the United States and North Korea is still dominating the news and it is looming over the financial markets. The broader Topix Japan's Topix index fell -1.1%, the most since May 18.
Inflation has risen 1.7 percent over the past 12 months, suggesting that inflation pressures remain well under control. While machinery orders are regarded to be a volatile metric, they could influence market sentiment.
In Europe, Britain's FTSE100 was down over one percent, Germany's DAX traded 0.5 percent lower, while the French CAC40 index was 0.62 percent in the red, as of 9:00am GMT. The Hang Seng index fell -0.4%, easing away from its two-year high print on Tuesday, while the China Enterprises Index lost -1.1%. The Shanghai Composite added 0.08 percent and the Shenzhen Composite inched higher by 0.073 percent.
The S&P 500 index had its biggest one-day drop in nearly three months on Thursday as investors fled riskier assets, with technology stocks leading the charge, in response to an increasingly aggressive exchange of threats between the United States and North Korea.
Market analysts expect that the pullback in stocks due to the increasingly aggressive tone in exchanges between Washington and Pyongyang will continue, although investors hope that the selling will not escalate to a correction - a decline of 10 percent or more.
Risk appetite deteriorated further later in the United States session on Thursday as U.S. equities remained under pressure.
Tensions between North Korea and the US have intensified in recent days after Trump warned of severe retribution should the authoritarian state proceed with any more missile tests or threats. The dollar fetched as little as 1,138.21 won in the Wednesday session compared to levels around the 1,127 handle earlier in the week.
The yield - or interest rate - on a benchmark 10-year US Treasury bill dropped to 2.24%, while a 10-year German bund was yielding 0.43%.
Meanwhile, gold demand in India remained sluggish this week as local prices jumped to their highest level in almost three months and a rally in global prices dampened fresh buying elsewhere in Asia.
Instead, investors headed for safe havens, such as gold, which gained as much as 1.2% - a near two-month high - in Wednesday trading.
"Most investors will be completely out of their depth in making any assessment on the (North Korea) situation", said Koon Chow, emerging market FX strategist at fund manager UBP.
Mounting tensions lifted US defense stocks.
Old Mutual reported a pretax profit of GBP940.0 million for the six months to June 30, up 76% from GBP534.0 million the prior year.
Mining heavyweights BHP Billiton and Rio Tinto retreated 2-3%, while gold miners Evolution and Newcrest rose about 2% each.
A separate report from the Labor Department showed an unexpected uptick in initial jobless claims in the week ended August 5th. Netflix was down 1.8 percent. Oil had risen on headlines about refineries stateside processing record levels of crude, Reuters said. Brent crude, used to price global oils, rose 20 cents to $52.10 a barrel in London. The governor of the Reserve Bank of New Zealand, Graeme Wheeler, said that he believed the bank's target inflation rate was still within reach and that a more dovish stance was not yet needed.
The Philippine central bank will also make its monetary policy decision later in the day.
Tokyo's benchmark Nikkei 225 index dropped 1.29 percent, or 257.30 points, to end the day at 19,738.71 while the Topix index of all first-section issues fell 1.07 percent, or 17.42 points, to 1,617.90.