U.S. stocks fall for fifth day as Treasuries retreat; TSX lower
A risk-off tone gripped financial markets, with U.S. stocks falling a fifth day as Treasury yields rose and the effects of the trade war with China starting to show up in corporate profits. Oil fell from US$75 a barrel even as a major hurricane headed for the Florida Panhandle.
The S&P 500 was mired in its longest slide since Donald Trump’s election win on rising concern that higher yields will crimp corporate earnings after Fastenal Co. added to angst over thinning profit margins. Chipmakers sank, dragging the Nasdaq indexes to the lowest since July, while Estee Lauder and Tiffany led losses after French luxury goods maker LVMH confirmed China is enforcing customs rules more strictly. The Cboe Volatility Index touched the highest since June. The 10-year bond climbed to 3.23 per cent.
The S&P/TSX Composite was also lower in morning trading, dragged down by energy and financials.
“The biggest thing going on in markets is you’re seeing an unwind,” Sameer Samana, a global quantitative and technical strategist for Wells Fargo Investment Institute, said by phone. “You had stocks doing really well, rates for the most part were very well-behaved. When you’ve got these risk-off moments, especially when you’re later in the cycle, there is some concern on the part of investors where it’s like, ‘Is this the beginning of the end?”’
Caution remains the key word across global markets as investors try to gauge whether the recent selloff has room to run. Valuations look more appealing, but the backdrop to trading is still dominated by deepening U.S.-China tensions and a surge in volatility for stock and bond markets. While the Treasury rout has eased, a glut of new U.S. debt is coming to the market this week. Following the American producer price data are consumer figures, which land on Thursday and may determine where yields go from here.
Elsewhere, Italian bonds erased a slump as the deputy premier predicted yields on the debt won’t blow out too far because of the government’s budget plans. The South African rand slipped following Tuesday’s rally. American crude traded near US$75 a barrel as Hurricane Michael curtailed offshore oil production and the IEA issued a warning to the global market.
These are the main moves in markets:
Stocks
The S&P 500 Index declined 1 per cent as of 10:32 a.m. New York time. The five-day slump is the longest since November 2016 and deepest since April. The Stoxx 600 sank 1.1 per cent to the lowest in about six months. The MSCI Asia Pacific Index fell less than 0.05 per cent. The MSCI Emerging Market Index decreased 0.7 per cent. In Toronto, the S&P/TSX composite index was down 206.85 points, or 1.30 per cent, to 15,647.20 as of 10:48 a.m. ET
Currencies
The Bloomberg Dollar Spot Index fell less than 0.1 per cent. The euro fell 0.3 per cent to US$1.1529. The British pound climbed 0.4 percent to $1.3196. The Japanese yen rose 0.1 per cent to 112.84 per dollar, a fifth straight gain.
Bonds
The yield on 10-year Treasuries jumped two basis points to 3.23 per cent. The two-year yield rose to 2.89 per cent and the 30-year hit 3.39 per cent. Germany’s 10-year yield increased one basis point to 0.56 per cent. The spread of Italy’s 10-year bonds over Germany’s rose one basis point to 2.9342 percentage points.
Commodities
West Texas Intermediate crude decreased 1.4 per cent to $73.92 a barrel. Gold futures were flat at US$1,190.70 an ounce.
With files from BNN Bloomberg
Source: BNN Bloomberg
https://www.bnnbloomberg.ca/u-s-stocks-fall-for-fifth-day-as-treasuries-retreat-tsx-lower-1.1150182
