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Sydney - Stock declines deepened globally on Friday, with European equities sliding and gauges tumbling across Asia as the negative news cycle for risk assets continued. Treasuries extended gains and the dollar fell.
China announced retaliation against US tariffs and there was further turnover in the US administration, compounding a selloff that started in technology shares and escalated when President Donald Trump stepped up his protectionist measures on Thursday.
Government bonds extended gains as investors sought safer assets, while traditional havens including gold and the yen jumped.
The Stoxx Europe 600 Index fell to a one-year low after equity indexes from Tokyo to Shanghai tumbled well over 3%. US stock futures were little changed, though, signalling a pause in the retreat for the S&P 500 Index after it closed down 2.5%, the most in six weeks.
German bunds edged higher and the yen jumped past 105 per dollar for the first time since November 2016 before paring the gain. Industrial metals slumped.
It’s been a miserable week for global markets, as a trade war edged closer, the tech sector was roiled by Facebook Inc.’s data scandal and a report showed European growth sputtering.
China said it would impose reciprocal tariffs after Trump announced duties on at least $50bn of Chinese imports. Traders had already been bracing for the possibility of slowing growth as the Federal Reserve reiterated its commitment to further interest-rate increases after Wednesday’s hike.
“The window from coming back from an all-out trade war is still open, but closing fast, and obviously leaves a lot of uncertainty over the next two to three weeks,” said Kay Van-Petersen, a Singapore-based global macro strategist with Saxo Capital Markets. It is “classic risk-off for equities today and potentially over the next few days,” Van-Petersen said.
Adding to the image of the ascendance of the “America first” faction, Trump said he is replacing White House National Security Adviser H.R McMaster with John Bolton, a controversial foreign-affairs specialist whom the US Senate declined to confirm as President George W. Bush’s ambassador to the United Nations.
Oil prices climbed amid worries that Bolton would pursue a hard-line stance against Iran.
Here are some key events on the schedule for the remainder of this week:
• The Bank of Russia’s rate decision is on Friday.
• US government funding is due to expire at the end of the day on Friday.
• Data on US durable-goods orders and new-home sales may provide more clues about the health of the world’s biggest economy.
• Moody’s Investors Service is set to announce on Friday whether it will leave South Africa’s credit rating at the lowest investment level.
And these are the main moves in markets:
Stocks
• The Stoxx Europe 600 Index dipped 0.8% as of 09:10, the lowest in more than 13 months.
• Futures on the S&P 500 Index fell less than 0.05% to the lowest in six weeks.
• The UK’s FTSE 100 Index decreased 0.5% to the lowest in more than 15 months.
• Germany’s DAX Index declined 1.7% to the lowest in more than two weeks.
• France’s CAC 40 Index declined 1% to the lowest in more than five weeks.
• The MSCI Asia Pacific Index sank 2.6%.
• Japan’s Topix sank 3.6%, Hong Kong’s Hang Seng decreased 2.6 %, South Korea’s Kospi dropped 3.2%, and Australia’s S&P/ASX 200 Index decreased 2%.
Currencies
• The Bloomberg Dollar Spot Index decreased 0.1%.
• The euro increased 0.2% to $1.2322.
• The British pound advanced less than 0.05% to $1.4098.
• The Japanese yen gained 0.3% to 105.01.$, the strongest in more than 16 months.
Bonds
• The yield on 10-year Treasuries fell one basis point to 2.82%, the lowest in more than a week.
• Germany’s 10-year yield decreased six basis points to 0.53%, the lowest in more than 10 weeks.
• Britain’s 10-year yield sank nine basis points to 1.44%.
• Japan’s 10-year yield fell one basis point to 0.024%.
Commodities
• West Texas Intermediate crude increased 0.9% to $64.90 a barrel.
• Gold climbed 0.8% to $1 339.55 an ounce, the highest in more than a month.
• LME copper fell 0.8% to $6 644.00 per metric ton, the lowest in 15 weeks.
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