A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

Stocks, Commodities Tumble as China Strikes Back: Markets Wrap

(Bloomberg) -- U.S. stocks and commodities tumbled after China retaliated with higher tariffs on a range of American goods. Treasuries jumped with the Japanese yen on demand for haven assets.

The S&P 500 dropped the most in four months, the Dow Jones Industrial Average slumped more than 600 points and the Nasdaq Composite saw the biggest decline of the year after China targeted some of the nation’s biggest exporters. Both Boeing and Caterpillar Inc. fell fell nearly 5%, while Apple Inc. lost 5.8%. The new penalties also took aim at American farmers, driving down soybean and cotton prices. The dollar rallied and the 10-year Treasury yield fell to the lowest level since late March.

Shares briefly came off lows during Monday’s session after President Donald Trump indicated he’ll speak with China’s Xi Jinping at the end of June during the G-20 summit and said he hasn’t yet decided about fresh tariffs on the remaining $300 billion in Chinese imports.

Trade rattled financial markets again, with stocks sinking for the fifth time in six sessions since China’s defiance of Trump’s warning not to retaliate for his imposition of higher tariffs Friday escalated the skirmish, driving demand for havens from gold to the yen while punishing risk assets. Several banks have warned that the eruption increases the likelihood of a slowdown in global growth that would dent corporate profits.

Stocks, Commodities Tumble as China Strikes Back: Markets Wrap

“China retaliating as fast as they did was a clear signal they’re not going to be pushed around,” said Samantha Azzarello, global market strategist for JPMorgan ETFs. “Markets would like a little bit more play nice and maybe even a bit of complacency from China. It was interesting it wasn’t done on the weekend. It was done just in time, Monday morning for markets to open.”

Elsewhere, European shares dropped more than 1% after the European Union said it was finalizing a list of U.S. goods to target in the event Trump imposes levies on car imports. Oil turned lower after rising earlier on concerns about rising tensions in the Persian Gulf. Bitcoin climbed above $7,000 as the recent gains in cryptocurrencies extended over the weekend.

Here are some notable events coming up this week:

  • Earnings this week include Vodafone, Alibaba, Tencent, Cisco, Nvidia.
  • New York Fed President John Williams speaks at an event in Zurich. Kansas City Fed President Esther George and Richmond Fed President Thomas Barkin also make appearances.
  • Japan balance of payments is due Tuesday.
  • China industrial production and retail sales are slated for Wednesday, same day as U.S. retail sales and industrial production.
  • Bank of Indonesia has an interest rate decision on Thursday.
  • Australian unemployment is out on Thursday.

And here are the main market moves:

Stocks

  • The S&P 500 Index decreased 2.4% as of 4 p.m. New York time, the biggest drop since Jan. 3.
  • The Dow Jones Industrial Average slid 2.4%, the most since Jan. 3.
  • The Nasdaq Composite Index tumbled 3.4%, the largest drop since Dec. 4.
  • The Stoxx Europe 600 Index fell 1.2% to the lowest in two months.
  • The MSCI Asia Pacific Index declined 0.9%.
  • The MSCI Emerging Market Index decreased 1.7%.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%.
  • The euro was little changed at $1.1232.
  • The British pound fell 0.3% $1.2963.
  • The Japanese yen jumped 0.6% to 109.33 per dollar.

Bonds

  • The yield on 10-year Treasuries fell seven basis points to 2.398%, the lowest since March 28.
  • Germany’s 10-year yield dipped two basis points to -0.07%.
  • Britain’s 10-year yield declined three basis points to 1.10%.

Commodities

  • West Texas Intermediate crude dropped 1.4% to $60.81 a barrel.
  • Gold increased 1% to $1,300.10 an ounce.

©2019 Bloomberg L.P.