U.S. stocks tumble on trade war, weakening outlook

Galtero Lara
Agosto 13, 2019

With the US and China offering no respite to their trade war and a slew of data pointing to slowing global growth, traders will look to this week's euro-zone GDP figures and industrial production reports from both China and America for further clues to the outlook.

President Donald Trump said on Friday he was not ready to make a deal with China, pouring cold water on any hopes that the dispute would end soon.

"This news creates a lot of this upside volatility", said Bruce Bittles, chief investment strategist at Robert W. Baird. The yield is used as a benchmark for interest rates on mortgages and other consumer loans.

Britain's 10-year yield fell one basis point to 0.482 per cent. The tariff detente did halt the bond rally, pushing the 10-year rate toward 1.7%.

The costly trade war between the US and China has rattled markets this month. Singapore's government cut its forecast for economic growth this year to nearly zero.

"It's an encouraging first steps but it's hard to speculate how far it will go", Peter Jankovskis, co-chief investment officer at Oakbrook Investments.

Meanwhile, the situations in Hong Kong and Argentina remained unstable.

Futures had indicated a lower open as protests in Hong Kong and a political shakeup in Argentina add to tensions over U.S. NY time.The Stoxx Europe 600 Index rose 0.5%.The MSCI Asia Pacific Index decreased 1.3%.The MSCI Emerging Market Index decreased 1.3%.

Here are some key events coming up: Companies releasing results include Barrick Gold, Chinas Tencent, JD.com and Alibaba, Cisco, Brazilian utility Eletrobras, Prudential, Australias Telstra, giant retailer Walmart, Nvidia, Swisscom and the Danish brewer Carlsberg.

The downward trend continued in Jakarta, Taipei, Bangkok and Wellington while the Shanghai Composite slipped 0.63% and the Shenzhen Component declined 0.85%.

Wednesday brings data on China retail sales, industrial production and the jobless rate.

Stocks fell sharply on Wall Street Monday, knocking almost 400 points off the Dow Jones Industrial Average.

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The pan-European ST OXX 600 index fell 0.4 percent by 0810 GMT, with European lenders weighing the most on the benchmark. The dollar strengthened and gold advanced.

Thursday sees the release of USA jobless claims, industrial production and retail sales data.

The Dow Jones Industrial Average fell 308.75 points, or 1.17%, to 25,978.69, the S&P 500 lost 30.85 points, or 1.06%, to 2,887.8 and the Nasdaq Composite dropped 79.90 points, or 1%, to 7,879.24.

In Asia overnight, stocks were mostly higher, with the China CSI 300 rising 1.8%, while Japan's Nikkei 225 added 0.4%.

The yen last fetched 105.37 per dollar, and was within striking distance of 105.03, its strongest since the January 3 flash crash.

The Japanese yen fell 1% to 106.35. "Major central banks are cutting rates, which will eventually provide economic support", Mitsubishi UFJ's Ishigane said. The new tariff would go into effect September 1 and more directly affect USA consumers.

Spot gold rose 0.33 per cent to US$1.516.42 per ounce, near the highest in six years.

The closely-watched yield spread between USA 2-year and 10-year notes narrowed to its smallest difference since at least 2010, according to Refinitiv data.

Shorter-dated U.S. Treasury yields have edged higher after consumer price data showed steady growth as expected, but the compression in yields continues with the two-year yield up 4 bps to 1.62% and the 10-year yield up a basis point to 1.65%; U.S. Dollar Index +0.1% to 97.43.

-With assistance from Sarah Ponczek and Olivia Rinaldi.

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