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U.S. equities sank Monday as the fallout from the White House’s moves against Chinese telecom giant Huawei battered technology shares and stoked trade jitters. The dollar slipped.
The S&P 500 Index dropped for the second straight session, with semiconductor stocks among the biggest laggards, and the tech-heavy Nasdaq 100 Index saw its biggest decline in a week. Ten-year Treasury yields rose before a slew of U.S. data this week as well as Federal Reserve policy-meeting minutes on Wednesday.
Markets remain on edge as the trade war develops, with the impact of President Donald Trump’s threats to choke Huawei Technologies Co. reverberating across the global supply chain on Monday and hitting some of the biggest component-makers. Trump said in an interview he was “very happy” with the trade war and that China wouldn’t become the world’s top superpower under his watch.
“Let’s be really clear on these trade talks: These are going to go on for months, quarters, years, maybe even decades. You don’t take 20 years of fairly free trade and try to reverse it or change it overnight,” Gibson Smith, chief investment officer at Smith Capital Investors, said in a phone interview. “It’s going to take a long period of negotiating. There will be some wins and some losses on both sides. In the end, the market’s going to have to adapt to the new pricing mechanism that’s associated with these trade negotiations.”
Software and semiconductor shares helped pull the Stoxx Europe 600 index lower. Equities fell in Hong Kong and China, though the offshore yuan held steady, signaling some relief after trade turmoil had dragged the currency to a five-month low. The euro edged higher following five days of declines as elections for the European Parliament approached.
Crude fluctuated after Saudi Arabia and other key producers in OPEC signaled their intention to keep oil supplies constrained for the rest of the year, while pledging to prevent any genuine shortages.
Here are some notable events coming up:
On Tuesday, Bank of England Governor Mark Carney testifies to Parliament about the May inflation report on Tuesday, and Reserve Bank of Australia Governor Philip Lowe speaks in Brisbane.The Fed minutes of its FOMC April 30-May 1 policy meeting will be released Wednesday.Counting of votes from the Indian general elections takes place Thursday as Prime Minister Narendra Modi attempts to secure a second term. ECB President Mario Draghi speaks in Frankfurt on Wednesday.The European Parliament holds continent-wide elections May 23-26.On Thursday, the ECB publishes its account of the April monetary policy decision.
And these are the main moves in markets:
The S&P 500 Index fell 0.7% as of 4 p.m. New York time; the Nasdaq 100 dropped 1.7%.The Stoxx Europe 600 Index fell 1.1%, its biggest drop in a week.The U.K.’s FTSE 100 Index sank 0.5%The MSCI Emerging Market Index declined 0.2% to the lowest in over four months.
The Bloomberg Dollar Spot Index sank 0.1%, the biggest drop in over a week.The euro increased 0.1% to $1.1166.The British pound rose less than 0.05% to $1.2726.The Japanese yen rose less than 0.05% to 110.04 per dollar.
The yield on 10-year Treasuries rose two basis points to 2.41%.Germany’s 10-year yield gained two basis points to -0.09%, the largest advance in three weeks.Britain’s 10-year yield climbed two basis points 1.055%.
Gold rose less than 0.05% to $1,278.15 an ounce.West Texas Intermediate crude gained 0.6% to $63.14 a barrel, the highest in almost three weeks.
--With assistance from Cormac Mullen, Adam Haigh and Todd White.
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