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Stocks Fall as Trade Threats Loom; Dollar Rises: Markets Wrap

Asia Equity Traders Face Mixed Start; Euro Climbs: Markets Wrap

Stocks Fall as Trade Threats Loom; Dollar Rises: Markets Wrap
A pedestrian is reflected in an electronic stock board outside a securities firm in Tokyo, Japan (Photographer: Tomohiro Ohsumi/Bloomberg)

(Bloomberg) -- U.S. stocks and Treasury yields fell as rhetoric from President Donald Trump heightened the threat of a global trade war. The euro fluctuated after Italy’s election left the country’s political leadership in limbo.

The S&P 500 Index dropped for the fourth time in five days after a flurry of tweets from Trump signaled he has no intention of backing down from plans for broad tariffs that could crimp profits at America’s biggest companies. Treasuries continued to push higher on a haven bid, while the greenback gained versus most peers. West Texas crude traded around $61 a barrel.

In Europe, the broadest measure of the region’s equities halted a four-day slide after a major breakthrough on the path to a German government. Italy’s stocks and bonds were the standout losers as anti-establishment political groups surged in Sunday’s election.

The Italian election result and Germany’s move toward a coalition kick off a busy week for macro events. Both the Bank of Japan and European Central Bank will meet to decide on interest rate policy, while China hosts its National People’s Congress. Overshadowing it all, however, will be the next developments on global trade after U.S. President Donald Trump riled markets with his proposed tariffs last week. America won’t lower duties on steel and aluminum from Mexico and Canada unless the two countries agree to a revamped Nafta, he said in a tweet on Monday.

There’s a “lot of politics this week, with Italy elections and NPC in China, also trade measures,” Frank Benzimra, head of Asia equity strategy at Societe Generale SA in Hong Kong, said. “The return of volatility we have seen since the end of January will probably remain.”

Stocks Fall as Trade Threats Loom; Dollar Rises: Markets Wrap

Elsewhere, West Texas oil fluctuated as geopolitical risk resurfaced, with a halt at Libya’s biggest crude field sparking speculation that supply will tighten and help reduce a global glut. Shanghai stocks bucked regional weakness as China kept its 2018 growth target of around 6.5 percent.

Terminal users can read more in our markets blog.

Here are some key events coming up this week:

  • The Chinese People’s Political Consultative Conference runs through March 15 and overlaps with the National People’s Congress meetings in Beijing, through March 20.
  • The Bank of Japan deputy governors’ confirmation hearings will be held Monday.
  • Reserve Bank of Australia monetary policy decision on Tuesday, with GDP data due Wednesday.
  • The ECB isn’t expected to change policy on Thursday, but the Governing Council may discuss a change to pave the way for the end of quantitative easing. 
  • BOJ monetary policy decision and briefing on Friday.
  • U.S. monthly payrolls data.

These are the main moves in markets:

Stocks

  • The S&P 500 Index fell 0.4 percent as of 9:30 a.m. New York time.
  • The Stoxx Europe 600 Index increased 0.3 percent, the first advance in a week.
  • The MSCI Emerging Market Index fell 0.8 percent with its fifth consecutive decline.
  • The U.K.’s FTSE 100 Index was little changed.

Currencies

  • The Bloomberg Dollar Spot Index gained 0.2 percent.
  • The euro dipped 0.1 percent to $1.2308.
  • The British pound advanced less than 0.05 percent to $1.3808.
  • The Japanese yen climbed 0.1 percent to 105.67 per dollar, the strongest in about 16 months.

Bonds

  • The yield on 10-year Treasuries dipped four basis points to 2.83 percent.
  • Germany’s 10-year yield declined three basis points to 0.63 percent, the lowest in more than five weeks.
  • Britain’s 10-year yield fell two basis points to 1.458 percent.

Commodities

  • West Texas Intermediate crude was little changed at $61.29 a barrel.
  • Gold fell 0.1 percent to $1,321.79 an ounce.

--With assistance from Abhishek Vishnoi

To contact the reporters on this story: Samuel Potter in London at spotter33@bloomberg.net, Randall Jensen in New York at rjensen18@bloomberg.net.

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

©2018 Bloomberg L.P.