Stocks Losses Mount Hours Ahead of Tariff Deadline: Markets Wrap
Bloomberg – U.S. stocks fell for a fourth day, putting the S&P 500 on pace for its worst week of the year, as a deadline approached for America and China to raise reciprocal tariffs. The yen climbed with Treasuries as investors sought havens, while the yuan fell to its weakest since January.
Sentiment worsened after China’s government-run Global Times said it’s unlikely that a trade deal would be reached before Friday. Tech shares led the declines, with Intel falling as much as 6.3%. The Stoxx Europe 600 fell the most this year, which the MSCI Asia Pacific gauge dropped the most in six weeks. The gap between 3-month and 10-year Treasury rates briefly turned negative, traditionally a recession warning.
“Trade has stolen the spotlight from the Fed and inflation this week, and for good reason, as we barrel toward a tariff increase on Chinese imports,” Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, wrote to clients.
China’s top trade negotiator, Liu He, is scheduled arrive in the U.S. later Thursday. Discussions will resume hours after concerns flared again about the strength of the Chinese economy — the country’s credit growth slowed in April to a level below all 27 estimates in a Bloomberg survey.
In comments to supporters at a Wednesday rally, President Donald Trump said China “broke the deal” and would pay, though he added that “it will all work out.” Beijing has warned it will retaliate should the U.S. hike tariffs as advertised on Friday.
“If tariffs are increased at 12:01 a.m. Friday, the decline in risk assets is likely to intensify,” said Dennis DeBusschere, head of portfolio strategy at Evercore ISI.
Meanwhile, simmering geopolitical tension elsewhere — from North Korea testing missiles again to renewed stress between America and Iran — added to the gloomy mood. Crude oil edged lower and emerging-markets stocks tumbled. Developing-nation currencies weakened. The lira trimmed some losses after Turkey’s central bank unexpectedly raised borrowing costs for the country’s lenders.
Here are some notable events coming up:
The U.S. releases the April CPI report Friday.
These are the main moves in markets:
The S&P 500 Index fell 1.3% as of 10:44 a.m. New York time, while the Nasdaq Composite Index dropped 1.6% and the Dow Jones Industrial Average slumped 1.5%. The Stoxx Europe 600 fell 1.7%. The MSCI Emerging Market Index dropped 2.5%. The MSCI Asia Pacific Index slumped 1.5%.
The Bloomberg Dollar Spot Index was little changed. The euro rose 0.3% to $1.1228 while the yen strengthened 0.5% to 109.55 per dollar. The British pound was little changed at $1.3015. The MSCI Emerging Markets Currency Index eased 0.8%.
The yield on 10-year Treasuries fell 5 basis points to 2.44%. Germany’s 10-year yield fell 1 basis point to negative 0.05%, the fifth straight decline.
West Texas Intermediate fell 1.5% to $61.22 a barrel. Gold rose. 0.3% to $1,284 an ounce. The Bloomberg Commodity Index fell 1%, the third decline in four days.