U.S. stocks sink most since June on trade, Treasuries angst
A risk-off tone gripped financial markets, with U.S. stocks falling the most since June as the effects of the trade war hit corporate profits. Treasuries pared losses and the yen rose on demand for haven assets.
The S&P 500 fell to a seven-week low, the Dow Jones Industrial Average plunged more than 400 points and the Nasdaq 100 Index tumbled 2.5 per cent in a broad selloff in U.S. equities. Boeing and Caterpillar dropped at least 3.3 per cent, while computer companies dragged the broader measure to its longest slide since Donald Trump’s election win.
Fastenal Co. added to angst that the trade war with China is raising materials costs that will crimp profit margins. Estee Lauder and Tiffany led losses after French luxury goods maker LVMH confirmed China is enforcing customs rules more strictly as trade tensions remain high. The Cboe Volatility Index hit the highest since June. Oil fell from US$75 a barrel even as a major hurricane headed for the Florida Panhandle.
“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
Canada’s main stock index posted a triple-digit decline in late-morning trading, weighed down by the broad-based decline led by the energy, industrial and technology sectors. The S&P/TSX composite index was down 253.04 points at 15,601.01.
The S&P 500 Index declined 1.4 per cent as of 11:28 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.
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 per cent to US$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 per centage points.
Commodities
West Texas Intermediate crude decreased 1.4 per cent to US$73.92 a barrel. Gold futures were flat at US$1,190.70 an ounce.
With files from The Canadian Press
Source: BNN Bloomberg
https://www.bnnbloomberg.ca/u-s-stocks-sink-most-since-june-on-trade-treasuries-angst-1.1150182
