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Bloomberg
US stocks slid to three-week lows as President Donald Trump’s threats of more trade protectionism against major partners were met with Chinese and European vows of retaliation, rattling global equities and sparking demand for the safety of bonds.
The S&P 500 Index fell to the lowest since May, with technology shares leading declines on reports the US Treasury Department plans to release fresh rules on Chinese investment in technology companies. The Dow Jones Industrial Average sank for the ninth time in 10 sessions with Boeing Co. and Caterpillar Inc. again pacing losses. China and Europe warned the escalating trade war could trigger a global recession.
The equity selling spread from Asia, where equities in Shanghai and Hong Kong declined despite China’s central bank freeing up liquidity in the banking system.
European shares also tumbled, with the Stoxx 600 Index down 1.5 percent. Political concerns hit Italian bonds and stocks after the nationalist League party won municipal elections. Emerging-market equities slid. US crude pushed towards $69 a barrel. .
After months of rhetoric and threats, the trade fight seems to be coming to a head, with Europe imposing tariffs on $3.3 billion of American products in response to US barriers on imports of aluminum and steel. That triggered threats of further tariffs on European cars from Trump. The proposed limits on Chinese technology investment strain already tense relations between the world’s two largest economies.
The rising tensions have weighed on stocks ahead of the second-quarter earnings season that so far has seen estimates keep rising. Daimler AG dented that notion, warning that tariffs will lower its profits.
Germany’s DAX Index was among the worst performers of the region’s stock gauges as data showed business sentiment slipped. Automakers were the big losers after more tariff threats from President Trump.
German Chancellor Angela Merkel holds private talks with leaders of the other parties in her coalition government on refugee policy and euro-area reforms in Berlin on Tuesday. New Zealand and Indonesia monetary policy decisions on Thursday. US personal spending probably increased in May for a third month, economists forecast ahead of Friday’s data.
The S&P 500 Index fell 1 percent in New York, the lowest in more than three weeks.
The Dow slipped 1 percent and the Nasdaq indexes each fell 1.2 percent. The Stoxx Europe 600 Index declined 1.5 percent to the lowest in 10 weeks on the biggest drop in almost four weeks. The MSCI All-Country World Index declined 1 percent. Emerging market shares fell 1.5 percent.
The Bloomberg Dollar Spot Index fell 0.1 percent to the lowest in more than a week.
The Japanese yen jumped 0.4 percent to 109.58 per dollar, the strongest in more than two weeks. The euro increased 0.3 percent to $1.1691, the strongest in more than a week. The British pound climbed 0.1 percent to $1.328, the strongest in more than a week. The Turkish lira gained less than 0.05 percent to 4.6769 per dollar, the strongest in more than a week.
The yield on 10-year Treasuries fell one basis point to 2.88 percent, the lowest in more than three weeks.
Germany’s 10-year yield declined one basis point to 0.33 percent, the lowest in almost four weeks. Britain’s 10-year yield decreased one basis point to 1.308 percent.
Gold declined less than 0.05 percent to $1,270.02 an ounce. Brent crude decreased 1.4 percent to $74.49 a barrel. LME copper advanced 0.1 percent to $6,792.50 per metric ton.