Yen and bond bulls charge on; Argentina braces for mauling

Asian shares falter as U.S.-China trade war recession worries weigh

Asian shares falter as U.S.-China trade war recession worries weigh

Against the dollar JPY=EBS the yen climbed 0.5% to 105.15 yen, its highest level against the US currency since March 2018, barring a flash crash in January this year.

NEW YORK, Aug 12 (Reuters) - Investors piled into gold, the safe-haven yen and bonds on Monday over nagging concerns about a prolonged U.S.

Goldman Sachs became the latest to cut its US growth forecast at the weekend, warning that a US China trade deal now looked unlikely before the 2020 US presidential election.

US stocks fell, following a decline in Europe, keeping a gauge of global equity performance lower. Blue-chip shares rose 1.04%, with listed brokerages boosted by a late-Friday announcement from China's securities regulator of relaxed margin financing rules.

Stocks in the near term lack a catalyst either from company earnings, the Federal Reserve or a trade deal, said Rahul Shah, chief executive of Ideal Asset Management in NY.

On Friday, Wall Street snapped a three-day winning streak after US President Donald Trump said Washington was continuing trade talks with Beijing, but that the US was not going to make a deal for now.

"Fitch kept Italy's rating unchanged and some market participants may be betting that a snap election could be delayed", said DZ Bank rates strategist Sebastian Fellechner, referring to the fall in yields.

Stocks could dip between 5% to 10% but lead long-term investors to enter the market as valuations fall, he said. Half of Shah's portfolio is corporate debt with the remainder tech stocks and shares with solid dividends, he said.

The Dow Jones Industrial Average slipped 391 points, or 1.49 per cent, to 25,896.44.

Germany's Ifo survey echoed the growth concerns with its measures for current conditions and economic expectations both having worsened in the third quarter.

Fears that US officials might embark on trying to weaken the dollar have grown after Beijing weakened its currency below a psychological 7 per dollar level earlier this month, signaling an escalation in the ongoing trade war with Washington. Spot gold added 1.1 per cent to US$1,512.51 an ounce. "The next target is the yen's high reached against the dollar early in January, but even that threshold won't present much of an obstacle at this rate".

MSCI's broadest index of Asia-Pacific shares outside Japan skidded 1 per cent.

"The longer the trade war drags on, the more likely it would weigh (on) the global outlook and crimp the world economy, a negative for market morale", said Joe Manimbo, senior market analyst at Western Union Business Solutions.

U.S. Treasury yields dropped across the board as trade worries and political tensions around the world in places such as Hong Kong and Argentina supported safe-haven assets.

U.S. long-term yields have fallen in six of the past nine sessions, reflecting investors' diminished risk appetite. Goldman Sachs lowered its fourth-quarter USA growth forecast by 20 basis points on its increased concerns about the trade ware, to 1.8 percent.

The Argentine peso fell to 57.6955 to the dollar after President Maurico Macri's poor performance in Sunday's primary election.

With 99% of the ballots counted, a coalition backing opposition moderate Peronist candidate Alberto Fernandez - whose running mate is former president Cristina Fernandez de Kirchner - had won by a far wider-than-expected 15.5 percentage points with 47.65% of votes.

Global benchmark Brent crude futures rose 4 cents to settle at US$58.57 a barrel while US West Texas Intermediate (WTI) futures gained 43 cents to settle at US$54.93 a barrel.