Stocks Slip, Bonds Steady Amid Latest Trade Tumult: Markets Wrap

(Bloomberg) -- U.S. stocks slipped after President Donald Trump fanned trade-war flames anew. Treasuries edged lower while the dollar held steady.

The S&P 500 Index sank as much as 1.3% after Trump warned that talks scheduled for next month could be canceled, but pared about half that drop after a White House aide reportedly walked back comments that suggested the U.S. wouldn’t do business with key Chinese telecommunications firm Huawei. The 10-year Treasury yield inched up to 1.74%.

Chipmakers were among the worst performers as the benchmark stock gauge halted a three-day rally and closed the week down 0.5%. It got off to a rough start Monday, when China’s currency devaluation sparked the biggest rout of the year.

As the protectionist showdown between the U.S. and China drags on, investors are struggling to gauge the likely outcome and potential impact on asset prices. That’s driving up market volatility as traders try to predict the road ahead for corporate profits, interest rates and economic growth.

“The market is very sensitive of the comings and goings and narratives around trade,” said Arthur Hogan, chief market strategist at National Securities Corp. “There’s a lot of volatility, it’s scary, it’s headline-driven.”

Elsewhere, the offshore yuan weakened and the yen gained. Oil jumped and gold held near $1,500 per ounce. Italian bonds tumbled as the government coalition teetered, raising the prospect of snap elections. The Stoxx Europe 600 fell, capping a second weekly decline. The pound weakened after data showed the U.K. economy shrank for the first time in more than six years.

Asian stocks were broadly higher, though Shanghai equities finished lower for the seventh time in eight sessions and Hong Kong shares also fell.

Here are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.7% at the close of trading in New York.
• The Stoxx Europe 600 Index declined 0.8%.
• The MSCI Asia Pacific Index increased 0.2%.
• Italy’s FTSE MIB Index declined 2.5%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The onshore yuan declined 0.2% to 7.0623 per dollar.
• The euro advanced 0.2% to $1.1203.
• The Japanese yen climbed 0.4% to 105.61 per dollar.
• Britain’s pound fell 0.9% to $1.2028.

Bonds

• The yield on 10-year Treasuries rose two basis points to 1.74%.
• Italy’s 10-year yield surged 27 basis points to 1.8%
• Germany’s 10-year yield declined two basis points to -0.58%.

Commodities

• Gold slipped 0.2% to $1,498.07 an ounce.
• West Texas crude gained 3.5% to $54.39 a barrel.
• Copper fell 0.5% to $2.594 a pound.

--With assistance from Cormac Mullen, Adam Haigh, Todd White and Luke Kawa.

To contact the reporter on this story: Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, ;Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh

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