World stocks fall and the dollar slips with investors flocking to bonds
Global stocks are subdued by trade fears as US and China continue its tariff-swapping rhetoric; the dollar falls on weak US economic data
New York — Stocks around the world fell on Thursday and the dollar slipped from a peak as investors flocked to bonds after weak economic data and on worries about a US-China trade war.
Oil futures were lower before an oil cartel Opec meeting expected to increase the world’s supply of crude and after a report of a large stockpile draw in the US.
The dollar fell from an 11-month high against a basket of major currencies as the Philadelphia Federal Reserve’s gauge of US Mid-Atlantic business activity fell to a near one-and-a-half-year low.
US equity investors made cautious bets on Thursday after European vehicle makers’ statements about the negative impact of international trade tension.
"We’re being held hostage to the trade tariff story. It’s clouding the view of economic growth," said Michael Antonelli, MD of institutional sales trading at Robert W Baird in Milwaukee. "It’s a flight to safety move. Yields are lower, and the leading sectors are staples, utilities and telecoms. Today is more of a ‘risk-off’ type session."
The Dow Jones Industrial Average fell 163.9 points, or 0.66%, to 24,493.9; the S&P 500 lost 13.5 points, or 0.49%, to 2,753.82; and the Nasdaq Composite dropped 41.94 points, or 0.54%, to 7,739.58.
The pan-European FTSEurofirst 300 index lost 0.91% and MSCI’s gauge of stocks across the globe shed 0.53%. However, Argentina’s main stock index rose 7.6%, putting it on track for its biggest one-day percentage gain since August 2017.
Index provider MSCI said late on Wednesday it would reclassify Argentina and Saudi Arabia as emerging-market countries next year, broadening the investor base for both countries. Saudi Arabia’s MSCI index rose 0.5%.
In US treasuries, benchmark 10-year notes last rose 5/32 in price to yield 2.9095%, from 2.928% late on Wednesday. The 30-year bond last rose 7/32 in price to yield 3.0528%, from 3.064% late on Wednesday. This was partly due to the ongoing US-China trade battle, which triggered German car maker Daimler to cut its earnings forecast.
"The trade war is still a factor," said Jim Vogel, interest rates strategist at FTN Financial in Memphis, Tennessee. "There was an awful lot of buying of treasuries overnight as people watched both Daimler and Italy."
Italian stocks and bonds also suffered as two eurosceptics were given key parliamentary finance roles by the country’s new coalition government.
The dollar index fell 0.19%, with the euro up 0.29% to $1.1604. The yen strengthened 0.30% against the greenback at ¥110.06 per dollar.
Sterling was last trading at $1.3248, up 0.58% on the day after the Bank of England’s chief economist unexpectedly joined a minority of the Bank’s policy makers calling for an interest rate hike at its latest meeting.
Oil prices fell a day ahead of a meeting of producers in Vienna, where Saudi Arabia is trying to convince fellow Opec members of the need to pump more oil, according to sources familiar with the talks. US crude was last down 0.14% at $65.62 a barrel and Brent was last at $73.64, down 1.47%.
Asian trading was mixed. Japan’s Nikkei added 0.6% and Australia’s main index had another strong day before the end of its financial year next week. But China’s Shanghai composite index finished 1.4% lower. MSCI’s broadest index of Asia-Pacific shares ended down 0.7%.