US stocks pare losses as trade dispute with China reassessed

Bloomberg

US stocks pared losses, while haven demand eased as investors speculated that the final form of any Chinese tariffs might be less onerous than currently proposed.
The S&P 500 Index cut its decline by almost two-thirds as representatives from China and the Trump administration left the door open for a negotiated solution. The proposals wouldn’t take effect for months.
Still, fear that the tensions will escalate further hit specific sectors after after China said it would levy 25 percent tariffs on some US imports. Boeing lost more than 3 percent and semiconductor shares fell nearly 2 percent. The Cboe Volatility Index jumped to 22, nearly double its level for the past year. Soybeans slumped almost 3 percent, while energy producers retreated.
“Markets don’t like uncertainty, and this back and forth with what the US is doing with tariffs and targeting specifically Chinese products and Chinese trade relationships and policies, they’re obviously not good,” Omar Aguilar, chief investment officer for equities at Charles Schwab Investment Management, said.
Markets have been buffeted in recent weeks by everything from a volatility spike and a tech selloff to fears of an all-out trade war, and developments suggest there may be more turbulence to come. Investors are having to weigh the growing protectionist rhetoric between the US and China against the chances of measures having a meaningful effect on the still-upbeat global growth picture.
“Trade uncertainty is the main headwind to the market,” Charles St-Arnaud, an investment strategist at Lombard Odier Asset Management in London, said. “At this juncture we need to be careful. The macro picture hasn’t changed massively yet. Growth remains robust, unless we go into a bigger trade war.”
Elsewhere inflation data from Europe matched estimates, and the euro stayed higher. West Texas oil fell as commodities were roiled by the growing trade dispute, while emerging-market stocks tumbled and their currencies dropped.
“This is a tricky one for markets,” said Thomas Thygesen, SEB AB’s head of cross-asset strategy in Copenhagen. “This inherent unpredictability will weigh on global economic growth. Sentiment is quite negative and the one thing that could change this is some sort of signal from central banks that they are willing to adapt their hawkish tone.”
US employment data are due on Friday; the jobless rate probably fell in March after holding at 4.1 percent for five straight months. The Reserve Bank of India will decide on monetary policy on Thursday.
The S&P 500 fell 1.4 percent in New York. The Nasdaq 100 Index lost 1.4 percent. The Stoxx Europe 600 Index dropped 1.1 percent. The MSCI All-Country World Index declined 0.3 percent. The MSCI Emerging Market Index fell 1.6 percent to the lowest in almost eight weeks. The MSCI Asia Pacific Index fell 0.7 percent to the lowest in almost eight weeks.
The Bloomberg Dollar Spot Index dipped less than 0.05 percent.
The euro advanced 0.2 percent to $1.2289. The British pound declined 0.1 percent to $1.4046. The Japanese yen climbed 0.4 percent to 106.23 per dollar.
The yield on 10-year Treasuries fell two basis points to 2.75 percent. Germany’s 10-year yield dipped one basis point to 0.49 percent, the lowest in 12 weeks. Britain’s 10-year yield declined two basis points to 1.359 percent, the lowest in almost 11 weeks.