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Bloomberg
US stocks slipped on growing trade tension and after reports that Deputy Attorney General Rod Rosenstein will leave his post. Oil climbed and the euro rallied.
As a Justice Department shakeup threatened to increase political turmoil, industrial shares led US equity indexes down after China warned it won’t meet with American officials unless they stop threatening to expand tariffs. Equities came off their lows of the day as tech shares gained with energy producers. Comcast Corp. plunged after agreeing to buy Sky Plc.
The euro gained and the region’s sovereign bonds dropped as European Central Bank President Mario Draghi predicted a pickup in underlying inflation. Treasuries edged lower.
Automakers were the worst performers as the Stoxx Europe 600 fell.
An uptick in political tensions and the escalation in cross-Pacific trade tensions are testing global equities, which have posted two strong weeks of gains in part due to optimism that economies can weather any potential tariffs. JPMorgan Chase & Co. said it’s starting to factor into its strategy a growing potential for a “Phase III†of the tariff war next year affecting all Chinese imports, which would lead to weaker growth in the country and hit US stocks.
Coming up this week is the Federal Reserve’s policy meeting that will likely see interest rates increased for the third time this year, with markets increasingly pricing for another one in December.
Elsewhere, Hong Kong stocks fell as holidays in China and Japan reduced volume. Indian shares and the rupee slid as cracks appear in Asia’s best-performing stock market this
year amid concerns about troubles in the non-bank financial sector. Emerging-market shares weakened and their currencies edged lower.
Brent crude climbed above $80 a barrel as OPEC and its allies signalled less urgency to boost output despite US pressure. The pound strengthened on increasing talk of a second UK referendum on the final Brexit deal.
Japanese PM Shinzo Abe meets with President Donald Trump in New York to discuss trade. The Fed decision on Wednesday will be followed by a press conference with Chairman Jerome Powell. Thursday sees durable goods, GDP data and jobless claims for the US.
The S&P 500 Index fell 0.5 percent in New York; the Nasdaq Composite lost 0.4 percent while the Dow Jones Industrial Average slid 0.5 percent. The Stoxx Europe 600 Index sank 0.6 percent. The MSCI All-Country World Index dipped 0.5 percent. The MSCI Emerging Markets Index decreased 0.9 percent, the first retreat in a week.
The Bloomberg Dollar Spot Index slipped 0.1 percent. The euro rose 0.3 percent to $1.1789. The yield on 10-year Treasuries increased one basis point to 3.07 percent, hitting the highest since May. Germany’s 10-year yield increased four basis points to 0.5 percent.