U.S. Stocks Drop Again as Trade Tensions Persist: Markets Wrap

(Bloomberg) -- U.S. stocks retreated further on Thursday and investors sought refuge in gold and bonds as the world’s two largest economies hardened their trade-war stances. The yen gained against the dollar, while 10-year Treasury yields fell to their lowest since 2017.

The S&P 500 Index dropped for a fourth session in five, and the Dow Jones Industrial Average lost 286 points, after the Chinese Communist Party’s flagship newspaper published two commentaries assailing U.S. moves to curb Chinese companies.

Stocks in industries seen as susceptible to trade disruptions -- including semiconductors, automobiles and energy -- retreated. Emerging-market shares slid and West Texas crude fell below $60 a barrel, while yields on bunds and gilts hit two-year lows.

Risky assets remain under pressure and havens in demand as investors dig in for what looks like a protracted trade dispute. One expert predicts tensions could endure until 2035, while economists are also turning more pessimistic. Goldman Sachs Group Inc. now sees higher odds of a stalemate between the two nations, and Nomura Holdings Inc. has shifted to forecasting a full-blown escalation of tariffs.

“Continued weak global economic data and the lack of a specific date for the resumption of U.S.-China trade talks are clouding earnings visibility and weighing on risk appetite,” said Alec Young, managing director of global markets research for FTSE Russell. “Markets are pricing in the harsh reality that trade tension is more likely to linger than quickly be resolved, as had been the consensus expectation anchoring sentiment until late April.”

The Stoxx Europe 600 Index had its worst day in two weeks as automakers tumbled after an EU official said the U.S. was unlikely to start trade talks with the bloc soon while it’s preoccupied with China. The dollar was little changed, while the British pound struggled to end its two-week losing streak against the euro.

Elsewhere, China’s yuan dipped in onshore trading even after the People’s Bank of China set its daily fixing at a stronger-than-expected level for a fourth straight day. West Texas crude had its biggest two-day drop of the year as inventory data alleviated concerns over a supply crunch. Commodities slumped across the board as traders increasingly girded for a full-blown trade war.

Here are some notable events coming up:

• The European Parliament holds continent-wide elections May 23-26.
• On Thursday, the European Central Bank publishes its account of the April monetary policy decision.

And these are the main moves in markets:

Stocks

• The S&P 500 Index declined 1.2% as of 4:02 p.m. New York time.
• The Stoxx Europe 600 Index decreased 1.4% to the lowest in more than a week.
• The U.K.’s FTSE 100 Index fell 1.4%.
• The MSCI Emerging Market Index fell 1.4% to a 19-week low.

Currencies

• The Bloomberg Dollar Spot Index fell less than 0.05%.
• The euro climbed 0.3% to $1.118.
• The British pound fell 0.1% to $1.2657.
• The Japanese yen advanced 0.7% to 109.59 per dollar, the biggest gain in two months.

Bonds

• The yield on 10-year Treasuries fell seven basis points to 2.31%, the lowest in about 19 months.
• Germany’s 10-year yield fell three basis points to -0.12%.
• Britain’s 10-year yield declined six basis points to 0.953%, a 23-month low.

Commodities

• West Texas Intermediate crude decreased 5.4% to $58.13 a barrel, the lowest in over 10 weeks.
• Gold gained 0.8% to $1,283.91 an ounce.
• The Bloomberg Commodity Index sank 1.3%, its biggest decline in over 16 weeks.

--With assistance from Andreea Papuc, Adam Haigh, John Ainger, Alexandra Harris and Yakob Peterseil.

To contact the reporters on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

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

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