Stocks Drop as Daimler Warning Revives Trade Angst: Markets Wrap

(Bloomberg) -- U.S. stocks fell following declines in Asia and Europe as Daimler AG’s profit warning fed into investor concern over the outlook for global trade and growth. Treasuries gained and the dollar weakened.

The S&P 500 Index slumped and the Dow Jones Industrial Average posted its eighth straight drop after the Supreme Court ruled states can collect sales tax from online retailers, rattling Amazon.com and EBay. Automakers also came under pressure after Daimler’s forecast and energy producers declined. U.S. gauges bounced off their lows of the day after a report that senior White House officials are trying to restart talks with China to avoid a trade war.

Even as skeptics doubted Daimler’s explanation for the poor forecast, the global market agenda continues to be dominated by trade threats and fears, which elicited warnings from major central bankers on Wednesday and are beginning to show up in the business cycle. While the U.S. outreach to China signaled a willingness by some officials to seek a truce before $34 billion in Chinese products are hit with tariffs, opponents inside the administration favor penalizing Beijing. President Donald Trump has shown no signs of backing down.

“At the moment we just want to be a little bit cautious,” Colin Graham, the chief investment officer of multi-asset solutions at Eastspring Investments, said on Bloomberg Television. “We are going to see more choppy returns.”

Elsewhere, Italian bonds and stocks were hit hard after two prominent critics of the European Union were given key posts in parliament. The pound jumped after the Bank of England’s chief economist unexpectedly supported an interest-rate increase.

The Stoxx Europe 600 fell to the lowest in almost two months. Emerging-market stocks and currencies retreated alongside commodities. Equity benchmarks in Hong Kong, Seoul and Shanghai all fell at least 1 percent. Stocks in the Philippines entered a bear market.

Terminal users can read more in Bloomberg’s Markets Live blog.

Here are some key events to watch for this week:

• The Organization of Petroleum Exporting Countries meets in Vienna on Friday.

And here are the main market moves:

Stocks

• The S&P 500 Index slipped 0.6 percent at the close of trading in New York.
• The Dow Jones Industrial Average fell 0.8 percent for its eighth consecutive drop.
• The Stoxx Europe 600 Index fell 0.9 percent.
• Italy’s FTSE MIB fell 2 percent.
• The MSCI Emerging Market Index decreased 1.1 percent.

Currencies

• The Bloomberg Dollar Spot Index fell 0.3 percent.
• The euro rose 0.4 percent to $1.1612.
• The British pound increased 0.6 percent to $1.3245.
• The Japanese yen rose 0.4 percent to 109.97 per dollar.

Bonds

• The yield on 10-year Treasuries declined four basis points to 2.9 percent.
• Britain’s 10-year yield slipped two basis points to 1.28 percent.
• Italy’s 10-year yield rose 18 basis points to 2.72 percent, a one-week high.

Commodities

• West Texas Intermediate slipped 0.7 percent to $65.75 a barrel.
• Gold was little changed at $1,267.50 an ounce.

--With assistance from Sophie Caronello, Andreea Papuc, Adam Haigh, Sheldon Reback, Yakob Peterseil, Samuel Potter, Christopher Anstey and David Wilson.

To contact the reporter on this story: Brendan Walsh in Austin at bwalsh8@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh

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