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

Stocks Fall After U.S. Says It Will Raise Tariffs: Markets Wrap

(Bloomberg) -- U.S. stocks futures slumped following the close of regular trading after President Donald Trump’s top trade negotiator said the U.S. plans to raise tariffs on Chinese goods, accusing Beijing of backpedaling on commitments it made during negotiations.

An exchange-traded fund tracking the S&P 500 fell 0.5 percent from its 4 p.m. close, while Treasuries extended gains. U.S. Trade Representative Robert Lighthizer told reporters Monday that the Trump administration plans to increase duties on Chinese imports on Friday. Stocks had marched almost all the way back from a sell-off fomented by Donald Trump’s threat to escalate the trade war.

“Escalation like this means we are certainly further away from the end of this negotiation process than we thought,” said Arthur Hogan, chief market strategist at National Securities Corp. “The three things that have been driving this market higher this year have been the pivot by the Fed, better than feared earnings, and the belief that we would get a trade deal done sooner rather than later.”

Seeking to ramp up pressure on China for more concessions, Trump threatened in two tweets to more than double tariffs on $200 billion of Chinese goods and impose a fresh round of duties on top of that. Talks to resolve the year-long trade standoff appeared to be on life-support Monday, with Beijing struggling to fully respond. China’s foreign ministry said that officials were still planning to travel to the U.S. for the next round of negotiations, but it was unable to confirm when amid signs that a delay is now being considered.

Elsewhere, Turkey’s lira weakened past six per U.S. dollar, touching its lowest level in almost seven months as a possible repeat of the March Istanbul mayor’s election hung over the market and added more pressure to emerging-market currencies.

Here are some notable events coming up:

  • Chinese Vice Premier Liu He is scheduled to return to Washington for trade talks on Wednesday, though the schedule may now be in flux.
  • The Reserve Bank of Australia meets to set interest rates Tuesday, while New Zealand central bank does the same the following day.
  • China releases trade data Wednesday, and the U.S. does so on Thursday.
  • South Africa holds national elections Wednesday.
  • China reports on inflation Thursday. The U.S. releases the April CPI report Friday.

These are the main moves in markets:

Stocks

  • The S&P 500 Index fell 0.5 percent as of 4:05 p.m. New York time, while the Nasdaq Composite Index dropped 0.5 percent and the Dow Jones Industrial Average slumped 0.3 percent.
  • The Stoxx Europe 600 fell 0.9 percent.
  • The MSCI Emerging Market Index dropped 1.8 percent.
  • The MSCI Asia Pacific Index slumped 1.1 percent.

Currencies

  • The Bloomberg Dollar Spot Index gained 0.2 percent.
  • The euro was little changed at $1.1206 while the yen strengthened 0.2 percent to 110.88 per dollar.
  • The British pound weakened 0.5 percent to $1.3102.
  • The MSCI Emerging Markets Currency Index eased 0.2 percent.

Bonds

  • The yield on 10-year Treasuries fell six basis points to 2.47 percent.
  • Germany’s 10-year yield fell two basis points to 0.01 percent.

Commodities

  • West Texas Intermediate rose 1.3 percent to $62.75 a barrel.
  • Gold rose 0.1 percent to $1,280 an ounce.
  • The Bloomberg Commodity Index fell 0.5 percent.

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