Stocks fall as trade war hits technology; bonds steady

Bloomberg

US equity futures dropped alongside stocks in Europe as the fallout of White House moves against Chinese telco giant Huawei rippled through the technology industry. Bonds pared an earlier loss while crude oil advanced.
Contracts on the Nasdaq 100 led US declines and pointed to a weak opening in New York, while software and chip maker shares helped pull the Stoxx Europe 600 index lower.
Equities were mixed across Asia, but they rallied in Australia and the nation’s currency jumped after a surprise election victory for conservative Prime Minister Scott Morrison.
China’s offshore yuan strengthened, signalling some relief after trade turmoil dragged down the currency to a five-month low. The euro steadied after five days of declines as elections for the European Parliament approached. Treasury 10-year note yields erased an earlier advance to trade little changed.
Markets remain on edge as the trade war develops, with the impact of the White House’s threats to choke Huawei Technologies Co reverberating across the global supply chain on Monday and hitting some of the biggest component-makers.
“The baseline scenario is not bad” for global growth, Philipp Hildebrand, vice chairman at BlackRock, said in a Bloomberg TV interview. “It’s really a risk story. So far we don’t see much of it being manifested in the hard data. It’s really the re-ordering of the global trading system that’s at stake here.”
Elsewhere, crude climbed after Saudi Arabia and other key producers in OPEC signaled their intention to keep oil supplies constrained for the rest of the year, while pledging to prevent any genuine shortages. In India, shares surged as exit polls showed PM Narendra Modi was poised to retain power.
On Tuesday, Bank of England Governor Mark Carney testifies to Parliament about the May inflation report on Tuesday, and Reserve Bank of Australia Governor Philip Lowe speaks in Brisbane. The Fed minutes of its FOMC April 30-May 1 policy meeting will be released on Wednesday.
Counting of votes from the Indian general elections takes place on Thursday as Prime Minister Narendra Modi attempts to secure a second term. ECB President Mario Draghi speaks in Frankfurt on Wednesday. The European Parliament holds continent-wide elections May 23-26. On Thursday, the ECB publishes its account of the April monetary policy decision.
The Stoxx Europe 600 Index fell 0.9% as in New York. Futures on the S&P 500 Index declined 0.5%. India’s Sensex Index increased 3.7%, headed for the largest climb in almost six years. The MSCI Emerging Market Index dipped less than 0.05%.
The Bloomberg Dollar Spot Index declined less than 0.05%. The euro declined less than 0.05% to $1.1156, reaching the weakest in almost three weeks. The Japanese yen strengthened 0.1% to 109.96 per dollar. The Australian dollar gained 0.7% to 0.692 per dollar, the biggest rise in 15 weeks.
The yield on 10-year Treasuries increased less than one basis point to 2.39%. The yield on two-year Treasuries rose one basis point to 2.21%.
Germany’s 10-year yield rose less than one basis point to -0.10%, the largest advance in two weeks.
Gold dipped 0.2% to $1,275.33 an ounce. West Texas Intermediate crude gained 0.2% to $62.88 a barrel, the highest in more than two weeks. Wheat rose 1.9% to $4.74 a bushel, the highest in six weeks.