Global Stocks Decline as Trade Tensions Linger
May 23 2018 - 6:16AM
Dow Jones News
By Riva Gold
-- Energy sector under pressure
-- Yen strengthens
-- Stocks in Europe, Japan drop
Global stocks fell Wednesday as investors continued to assess
trade tensions, the possible cancellation of a June summit with
North Korea and a fall in commodity prices.
The Stoxx Europe 600 was down 0.9% in morning trading led by
losses in energy and basic resource companies, following a steeper
drop across Asian markets. Futures pointed to a 0.6% opening fall
for the S&P 500 after it turned lower in late trading
Tuesday.
Oil-and-gas companies led declines in Europe and Asia as Brent
crude oil fell 0.7% to $79.02 a barrel amid reports that OPEC may
ease supply curbs next month.
Analysts and investors also said they were closely watching
developments on global trade, pointing to uncertainty over an
agreement with China over telecom giant ZTE.
Industrial stocks, which rallied Monday on news the U.S. would
suspend efforts to apply tariffs in $150 billion in Chinese
imports, helped lead the declines in the U.S. late Tuesday.
The Senate Banking Committee approved legislation Tuesday to
tighten national-security reviews of Chinese technology giants,
strengthen export controls and prohibit the Trump administration
from lifting stiff penalties imposed on ZTE.
Investors also parsed reports that President Donald Trump is
weighing measures to cut European Union steel and aluminum exports
to the U.S. by about 10%.
"[Trade] risk is going to be more impactful to the market than
others because this does directly impact the economy," said Katie
Nixon, chief investment officer at Northern Trust Wealth
Management. "You'll continue to see market moves ebb and flow with
trade news, whether it's the U.S. and Europe over steel and
aluminum tariffs or with China."
Europe's basic resources sector fell 2.5% on Wednesday. Shares
of steelmaker ArcelorMittal, steel-pipe product manufacturer
Tenaris and stainless steel manufacturer Outokumpu Oyj were all
down roughly 3%.
Italian stocks also remained under pressure amid concerns the
prospective antiestablishment government there will stake out
anti-euro positions and start a spending-binge. Italy's FTSE MIB
Index fell 1.7%, bringing its losses this month close to 5%, while
Italian 10-year government bond yields climbed to 2.396%.
As investors broadly shed risky assets, yields on 10-year
Treasurys fell to 3.013% from 3.065% late Tuesday, signaling a rise
in prices, while the dollar fell 1% against the Japanese yen.
The euro was down 0.5% to $1.1725 as data confirmed business
activity in the eurozone slowed and French unemployment rose.
The Turkish lira continued to hit record lows and was last down
3.4% against the dollar.
Earlier, stocks in Asia mostly fell, echoing losses in the U.S.
as investors considered developments on trade and news that
President Trump said he would scotch a planned summit with Kim Jong
Un unless the North Korean leader first agreed to a list of
unspecified conditions.
Japan's Nikkei Stock Average shed 1.2% amid a steep climb in the
yen while Hong Kong's Hang Seng fell 1.8% and Shanghai stocks fell
1.4%.
Shares of Chinese auto makers were under pressure following news
that China will reduce its import tariff on autos starting July in
a concession to U.S. trade complaints.
Joanne Chiu contributed to this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
May 23, 2018 06:01 ET (10:01 GMT)
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