Wall St drops at open as trade war stokes fears of recession

For starters the president’s tweets overmagnify the importance of a 10 percent tariff on $300 billion which is $30 billion — nothing to a $20 trillion economy like ours

For starters the president’s tweets overmagnify the importance of a 10 percent tariff on $300 billion which is $30 billion — nothing to a $20 trillion economy like ours

Highlighting the fallout of the trade dispute on global growth, a survey by Germany's Ifo economic institute on Monday showed the economic outlook for third quarter has deteriorated worldwide. The Hong Kong airport shut down on Monday when thousands of demonstrators occupied its main terminal.

US equity futures reversed an advance on Monday alongside European stocks as mounting unrest in Hong Kong weighed on investor sentiment.

Contracts for all three main USA equity indexes retreated after Hong Kong airport authorities canceled remaining flights for the day, while a Chinese official said the city was at a "critical juncture" and that there were signs of "terrorism".

Heading back Stateside, the benchmark 10-year Treasury yield, which slipped to its lowest level since 2016 last week, fell to 1.63%. Citigroup, Morgan Stanley and Goldman Sachs fell about 3% apiece.

The S&P index recorded five new 52-week highs and nine new lows, while the Nasdaq recorded 13 new highs and 62 new lows. It again said it no longer expects a trade deal between ongoing U.S. Government bond gains show ongoing caution by traders who've increased bets for more central bank stimulus in recent weeks, as the USA and China escalate their trade war and a slew of global data point to slowing growth. Argentina's euro-denominated bonds slid in after President Mauricio Macri's poor showing in primary elections on Sunday.

Companies releasing results include China's Tencent, JD.com and Alibaba, Cisco, Brazilian utility Eletrobras, the U.K.'s Prudential, Australia's Telstra, giant retailer Walmart, Nvidia, Swisscom and the Danish brewer Carlsberg.

Data on inflation, housing starts and retail sales are due later in the week, and will be scrutinized by market participants for signs of economic softening. Core prices, which exclude food and energy, are seen rising 2.1%.

China retail sales, industrial production and the jobless rate to be released on Wednesday. USA jobless claims, industrial production and retail sales data would be released on Thursday. The Nasdaq Composite dropped 51.65 points, or 0.65%, to 7,907.49 at the opening bell. Despite the turmoil, the Dow ended last week lower by less than 1%.

The MSCI Asia Pacific Index decreased 0.1 per cent. The yuan edged higher as China's central bank fixing continued to signal its determination to manage an orderly currency depreciation.

The Stoxx Europe 600 Index dipped 0.1 per cent.

Bloomberg Dollar Spot Index was flat. The offshore yuan added 0.1% to 7.0914 per dollar.

The Japanese yen strengthened 0.6% to 105.10 per dollar.

The drop in yields is amplifying worries about the economy; the spread between the two-year and 10-year yields has narrowed to 6 bps after the two-year yield fell 5 bps to 1.58% and the 10-year tumbled 10 bps to 1.64%, not far from an inversion of the 2-10 spread that is widely viewed as a recession indicator.

Since the beginning of the year, 10-year yields have fallen more than a hundred basis points, on track for its steepest drop in eight years.

Gold rose 0.5% to $1 505.02 an ounce.

Noticias recomendada