U.S. Stocks Open Lower Amid Trade Tensions
May 23 2019 - 10:09AM
Dow Jones News
By Will Horner
U.S. stocks opened lower Thursday and U.S. government bond
yields fell as worries over a protracted U.S.-China trade dispute
added to a gloomy outlook for global growth.
The Dow Jones Industrial Average fell 268 points, or 1%, to
25507 shortly after the opening bell. The S&P 500 dropped 0.1%
and the Nasdaq Composite declined 1.2%.
In Europe, the Stoxx Europe 600 dropped 1.2% by afternoon
trading, with all sectors of the pan-continental index falling into
the red.
Losses were heaviest for automotive and technology stocks which
bear the greatest exposure to the recent flare-up of trade tensions
between the U.S. and China.
In Asia, markets were broadly lower. The Shanghai Composite
slipped 1.4%, Hong Kong's Hang Seng traded 1.6% lower and Japan's
Nikkei lost 0.6%.
Investors sought the safety of government bonds as a batch of
European economic data suggested a surprise rebound for the
region's economy at the start of the year would be short-lived.
A measure of business sentiment in Germany dropped sharply while
surveys of purchasing managers pointed to weaker demand for
eurozone exports and a struggling manufacturing sector.
Yields on 10-year U.S. government bonds, which fall as prices
rise, hit a 52-week low of 2.356%.
Kit Juckes, a macro-strategist at Société Générale, said
investors would read a lot into the data as they looked for clues
as to whether growth would rebound or slip back.
"The market is uncertain about where we go next. Anything that
gives the market a cue will be latched onto, so we will overreact
to weak data," he said.
Investors were also looking ahead to the European Parliamentary
elections that began in the U.K. and the Netherlands Thursday.
Populist parties are predicted to perform well across Europe when
continentwide results are announced Sunday.
That could make compromises between European Union governments
less likely and embolden euroskeptics, said Jörg Krämer, chief
economist at Commerzbank.
"After victory in the European elections, the parties critical
of the European Union will become even more self-confident," he
said in a recent note. "This will cause nervousness in the
market."
The British pound lost another 0.2% against the dollar as a
last-ditch attempt by Prime Minister Theresa May to win support for
her Brexit plan looked unlikely to succeed. The resignation
Wednesday of Andrea Leadsom, the latest cabinet member to quit over
Brexit, further hit sterling.
Uncertainty over the U.S.-China trade dispute -- with no date
yet set for more talks -- was also making investors pessimistic
about hopes for a resolution, analysts said.
Mixed messages on the issue made it hard for investors to settle
on a likely outcome, said Geoffrey Yu, head of the U.K. Investment
Office at UBS Wealth Management.
"Investors may have trouble focusing on too many narratives at
once. Right now, tensions between the U.S. and its major trading
partners continue to drive stock market volatility," Mr. Yu
said.
Investors were also weighing the latest meeting minutes from the
Federal Reserve, which reinforced the view that the central bank
will leave interest rates unchanged for now. The meeting took place
before the recent flare up in trade tensions.
(END) Dow Jones Newswires
May 23, 2019 09:54 ET (13:54 GMT)
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