US stocks drop on growth fears; Treasuries decline, oil climbs

Bloomberg

US and European stocks dropped on Monday as investors digested warnings from the world’s financial leaders about the impact of protectionism on growth. Oil climbed amid tension between the US and Iran.
The S&P 500 Index declined, pulled down by tech and industrial shares. Treasuries slipped while the dollar held steady. The Stoxx Europe 600 Index edged lower after sudden changes in leadership at Fiat Chrysler hit carmakers, while travel companies also declined after Ryanair posted a 20 percent decline in first-quarter profit.
Commodities climbed, with WTI oil advancing after President Donald Trump warned his Iranian counterpart not to threaten the US. The ratcheting up of rhetoric is offsetting a mixed earnings season, which continues on Monday with Alphabet the main focus.
US investors are “likely to continue to look to Q2 earnings results for positive offsets to worries about trade disputes and political drama stateside and abroad,” John Stoltzfus, the chief investment strategist at Oppenheimer & Co., wrote in a note to clients. “For now economic and corporate fundamentals appear in good shape and offer positive offsets to trade concerns.”
In Asia, Japan’s 10-year government bonds plunged, sending the yield up the most in almost two years, while the yen rose on reports of possible changes to the nation’s ultra-loose monetary policy.
That spurred the central bank to offer to buy an unlimited amount of securities in a fixed-rate operation. The yuan slipped.
The world’s finance chiefs over the weekend said global growth remains robust and many emerging-market countries are better prepared to face crises, but risks to the world economy have increased. Also rattling investors, Trump took issue with the yuan’s six-week slide to the weakest level in more than year, raising concern that the America-China trade war is now spilling over into currency markets.
Elsewhere, emerging-market currencies and stocks were steady. Bitcoin pushed above $7,700.
Earnings season continues with the following tech companies among those reporting: Facebook, AT&T, Amazon.com, Twitter, Advanced Micro Devices, Qualcomm and Intel. They are joined by global financial giants Deutsche Bank, UBS, Nomura and Visa. Others include Halliburton, Michelin, Boeing, Lockheed, Nissan and Shell. Pakistan holds national elections on Wednesday. European Central Bank’s policy decision on Thursday. US gross domestic product probably increased by about 4 percent at an annualised rate in the second quarter, the most since 2014, economists forecast ahead of Friday’s data.
The S&P 500 Index declined 0.2 percent in New York. The Stoxx Europe 600 Index fell 0.2 percent. The UK’s FTSE 100 Index fell 0.2 percent, the biggest fall in a week. The MSCI Emerging Market Index decreased 0.2 percent.
The Bloomberg Dollar Spot Index advanced 0.2 percent. The euro fell 0.2 percent $1.1705. The British pound declined 0.2 percent to $1.3109. The Japanese yen increased 0.1 percent to 111.34 per dollar, the strongest in almost two weeks.
The yield on 10-year Treasuries gained four basis points to 2.94 percent, the highest in more than a month. Britain’s 10-year yield advanced two basis points to 1.256 percent. West Texas Intermediate crude advanced 0.5 percent to $68.56 a barrel.
Gold declined 0.3 percent to $1,225.30 an ounce. LME copper gained less than 0.05 percent to $6,148.00 a metric ton.