Stocks Decline as Trade Angst Weighs on Sentiment: Markets Wrap

(Bloomberg) -- U.S. stocks fell for the first time in four days as fresh trade anxiety outweighed a dovish shift by the Fed ahead of a highly anticipated sit-down between the U.S. and China. Treasuries rose, while the dollar dropped.

The S&P 500’s late rally faltered as speculation that President Donald Trump won’t be able to tamp down his trade spat with China at the G-20 meeting hurt sentiment. Tech firms that led Wednesday’s rally paced declines. Banks also fell as the 10-year Treasury yield held near its lowest level since September as Fed minutes appeared to signal the central bank is preparing for a more flexible path. Chairman Jay Powell sparked the biggest stock rally since March with dovish comments.

“The G-20 meeting is a binary event -- no one knows what the outcome is,” Nathan Thooft, Manulife Asset Management’s head of global asset allocation, said in an interview at Bloomberg’s New York headquarters. “The optimists are looking for some evidence of thawing in the China, US trade dynamics, the pessimists are saying there’s no way they’re going to resolve it.”

Trade and political developments vied for attention Thursday as Trump heads to Buenos Aires to meet President Xi Jinping. The latest twist in Robert Mueller’s investigation threatened to distract Trump after his former lawyer, Michael Cohen, pleaded guilty to new crimes related to the his business dealings in Russia. While the dovish Fed turn potentially removed a market overhang, the trade tensions remained a problem for investors concerned that global growth is slowing.

In Europe, shares and bonds rose, while the pound fell as U.K. Prime Minister Theresa May raised the prospect of a “no deal” Brexit. Deutsche Bank AG slid after prosecutors said its headquarters were being searched in a money laundering probe.

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Coming Up

• Trump and Chinese President Xi Jinping plan to meet at the G-20 meeting of world leaders in Argentina that kicks off on Friday.
• Thursday sees the release of the minutes from the Federal Open Market Committee’s November meeting.

These are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.2 percent as of 4 p.m. New York time.
• The Dow Jones Industrial Average dropped 0.1 percent.
• The Nasdaq composite declined 0.3 percent, while the Nasdaq 100 fell 0.1 percent.
• The Stoxx Europe 600 Index rose 0.2 percent.
• The MSCI Emerging Market Index rose 0.5 percent.
• The MSCI Asia Pacific Index increased 0.6 percent.

Currencies

• The Bloomberg Dollar Spot Index fell 0.1 percent.
• The euro climbed 0.2 percent to $1.1392.
• The British pound declined 0.3 percent to $1.2785.
• The Japanese yen rose 0.3 percent to 113.39 per dollar.

Bonds

• The yield on 10-year Treasuries fell three basis points to 3.03 percent, the first decline in four days.
• Germany’s 10-year yield fell three basis points to 0.32 percent, the lowest in more than 14 weeks.
• Britain’s 10-year yield dipped three basis points to 1.345 percent, the lowest in more than three months.

Commodities

• West Texas Intermediate crude rose 2.1 percent to $51.34 a barrel.
• Gold was steady at $1,230.10 an ounce.

To contact the reporters on this story: Randall Jensen in New York at rjensen18@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editor responsible for this story: Jeremy Herron at jherron8@bloomberg.net

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