Stocks fell around the world, while the yen and government bonds rallied, as heightened concern that global growth is faltering drove investors into haven assets.
U.S. stocks sank a second day, as Allergan Plc plunged on concern that a clampdown on inversions may derail a merger with Pfizer Inc. Japan’s yen jumped to a 17-month high versus the U.S. dollar and strengthened against all 16 of its major peers. Yields on 10-year German bonds dropped to the lowest in a year, while all but two members of Germany’s DAX Index fell after an unexpected decline in the nation’s factory orders. South Africa’s rand led declines for developing-nation currencies. Gold advanced the most in a week.
Investors are turning cautious after worse-than-expected economic data in the U.S. and Germany this week, and comments from International Monetary Fund head Christine Lagarde highlighting greater risks to global growth. That marks a reversal from optimism last month, which helped add $4.5 trillion to the value of global equities. The U.S. Federal Reserve releases the minutes from its latest meeting on Wednesday. Data on Tuesday showed orders for durable goods fell in February, the third decline in four months.
“We’re stalling out,” Michael Block, chief strategist at Rhino Trading Partners LLC in New York, said by phone. “That’s part of it and it’s being exacerbated by this continued rally in the Japanese yen and the release from the Treasury that’s causing a lot of pain in Allergan. Pain is being felt everywhere. We have Fed minutes tomorrow and the expectation is for it to be super dovish and if it’s not then people might get confused.”
The Standard & Poor’s 500 Index slid 0.9 percent at 9:41 a.m. in New York. Allergan tumbled 18 percent, while Pfizer rose 1 percent, after analysts said new U.S. rules to limit the tax-cutting power of corporate inversions may jeopardize the drugmakers’ planned $160 billion merger.
The MSCI All-Country World Index lost 1.1 percent, led by commodity producers. The Stoxx Europe 600 Index dropped 1.7 percent, heading for the lowest since Feb. 25.
Germany’s DAX fell 2.4 percent, the most among western European markets, after a report showed Europe’s largest economy suffered an unexpected drop in factory orders in February.
A gauge of Italian bank stocks dropped for a ninth day, the longest run since June 2014, after a report said that rescued lenders generated fresh non-performing loans in the fourth quarter. Banco Popolare SC and Banca Popolare di Milano Scarl, which have agreed on a merger, among the biggest declines in the Stoxx 600.
The yen added 0.7 percent to 110.52 per dollar, the strongest level since the central bank eased monetary policy in October 2014. It appreciated even after Bank of Japan Governor Haruhiko Kuroda said he will keep monitoring foreign-exchange markets and reiterated the potential for additional monetary stimulus.
“The Bank of Japan has been pretty ineffective in getting the yen weaker even though we expect further easing from them,” said Jason Wong, a currency strategist at Bank of New Zealand Ltd. in Wellington. “It’s just a sense that there’s not a lot the Bank of Japan can do about the yen.”
Currencies of commodity-exporting countries declined, with the Australian dollar falling 0.9 percent, and the New Zealand dollar dropping 0.8 percent. The euro slid 0.2 percent to $1.1368.
U.S. Treasuries advanced, pushing the 10-year yield lower by four basis points to 1.73 percent, the lowest in more than a month. The securities, which often gain in times of market stress, advanced with their German peers.
Yields on German 10-year debt declined four basis points to 0.09 percent, the first time they fell below 0.1 percent in about a year.
The MSCI Emerging Markets Index of stocks dropped 1.7 percent, heading for the biggest decline since Feb. 11. It has fallen 2.8 percent this month, following a 13 percent surge in March.
Hong Kong’s Hang Seng China Enterprises Index declined 1.9 percent. India’s S&P BSE Sensex fell 2 percent, and the rupee slipped 0.6 percent. The central bank cut its repurchase rate by 25 basis points, in line with estimates.
A Bloomberg gauge of emerging market currencies fell 0.6 percent and is down 1.1 percent in April. South Africa’s rand posted the biggest decline out of 24 emerging-market currencies, weakening by 1.7 percent. The National Assembly is set to vote Tuesday on whether to dismiss President Jacob Zuma for serious misconduct. The leadership of the African National Congress, which has a 62 percent majority in the assembly, has rallied behind Zuma, signaling he will probably escape impeachment.
Gold for immediate delivery increased 1.5 percent to $1,233.47 an ounce, according to Bloomberg generic pricing.
West Texas intermediate crude retreated 0.1 percent to $35.67 a barrel. Inventories probably rose by 2.85 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report due Wednesday.
Copper for delivery in three months added 0.5 percent in London at $4,782 a metric ton. It fell in the seven previous days, the longest run in two years. Aluminum dropped 0.8 percent, and zinc fell 2 percent.