US stocks extend declines as Treasuries, dollar stabilise

Bloomberg

US stocks extended losses as traders remained on edge following Friday’s sell-off. Treasuries and the dollar steadied.
Technology and energy shares led declines in the S&P 500 Index, and a rebound in banks fizzled out. Ten-year Treasury yields traded near 2.44 percent after a closely-watched part of the US curve inverted as investors wager the Federal Reserve will need to cut rates. The greenback dropped against most of its Group-of-10 currency peers. European shares fell even after data showed confidence among German companies improved.
The risk rally has come under scrutiny in recent sessions, after stock valuations climbed near levels reached during the height of last year’s euphoria. While weakening data and a pivot by global central banks away from tighter policy is shaking confidence, and a breakthrough in US-China trade talks could provide support going forward. Investors also digested news that Special Counsel Robert Mueller found no evidence anyone close to Donald Trump colluded with Russia in the 2016 presidential campaign.
“It’s mildly positive for risk assets, but only very mildly and not nearly enough to overcome skittishness and downward pressure from continued weakness in global economic data,” said Aaron Hurd, a senior portfolio manager in the currency group at State Street Global Advisors, whose team manages $104 billion.
The pound rose at the start of a week that could bring yet another vote on UK Prime Minister Theresa May’s Brexit plan.
Elsewhere, the Turkish lira recouped some of its Friday slump, which followed the start of an investigation by the country’s banking regulator into JPMorgan Chase & Co and another probe of unspecified banks for stoking the currency’s plunge. Earlier, Asia was in catch-up mode, with stocks tumbling in Tokyo. Australia’s 10-year bond yield recorded an all-time low and Japan’s hit the lowest since September 2016.
Apple Inc unveiled new products including video and magazine subscriptions on Monday. US-China trade talks resume, with a cabinet-level American delegation due in China.
UK Parliament is likely to stage several key votes on Brexit. China’s Boao Forum for Asia holds its annual conference this week.
A top Chinese government leader will deliver a keynote speech, and officials including Central Bank Governor Yi Gang and Finance Minister Liu Kun are scheduled to speak.
Fed Governor Randal Quarles will speak Friday to the Shadow Open Market Committee on “Strategic Approaches to the Fed’s Balance Sheet and Communications.”
The S&P 500 Index dropped 0.5 percent to 2,788.17 in New York. The Stoxx Europe 600 Index dipped 0.4 percent to the lowest in almost two weeks. The MSCI Asia Pacific Index sank 2 percent, the largest tumble in five months. The MSCI Emerging Market Index decreased 1.4 percent.
The Bloomberg Dollar Spot Index dipped 0.1 percent. The euro rose 0.2 percent to $1.1324. The Japanese yen fell 0.1 percent to 110.07 per dollar. The British pound increased 0.2 percent to $1.3233.
The yield on 10-year Treasuries dipped less than one basis point to 2.44 percent. Germany’s 10-year yield increased less than one basis point to -0.01 percent. Britain’s 10-year yield rose one basis point to 1.023 percent.
The Bloomberg Commodity Index dipped 0.2 percent. West Texas Intermediate crude declined 0.3 percent to $58.85 a barrel. Gold rose 0.4 percent to $1,319.01 an ounce, the highest in almost four weeks.