US stocks fall, dollar rises amid trade tensions

Traders in the Standard & Poor's 500 stock index options pit at the Chicago Board Options Exchange (CBOE) react after it was announced that the Federal Reserve would increase interest rates. The Federal Reserves raised the interest rates for the firs
Traders in the Standard & Poor's 500 stock index options pit at the Chicago Board Options Exchange (CBOE) react after it was announced that the Federal Reserve would increase interest rates. The Federal Reserves raised the interest rates for the firs

US stocks slumped for a second day as investors continue to grapple with rising Treasury yields at the same time the Trump administration’s trade war with China adds to concern over global growth. The dollar rose.

The S&P 500 fell back below 2 800 and the Cboe Volatility Index popped above 18 as equities remained on uneven footing following last week’s sell-off.

Earnings dictated the biggest individual moves, with Textron sliding the most in the benchmark after disappointing results. Philip Morris surged, while Sealed Air tumbled after citing rising costs for weak profits. The weakness in American stocks comes after China sank overnight, bringing losses in its major benchmark to 30% since January highs. European shares were mixed.

Treasuries that had stabilised following last week’s rout remained under pressure for a second day, with investors ditching the debt after the Federal Reserve meeting minutes brought no signs the central bank will turn dovish any time soon. The dollar rose against major peers, while most emerging currencies retreated.

“The market is freaked out over interest rates. Plus some of the earnings - IBM, Home Depot - the home-building group was very, very weak,” said Donald Selkin, chief market strategist at Newbridge Securities. “It’s the higher rate scenario. A lot of the big earnings are next week and after - the high fliers - maybe they’ll be able to salvage things.”

As earnings season picks up steam, investors continue to assess a host of macroeconomic issues. The Fed minutes underscored the central bank’s intention to keep raising rates at the same time the Trump administration presses its trade war with China. Europe remains on tenterhooks over Brexit negotiations and the Italian budget drama.

Elsewhere, most metals traded lower in London after being hurt by the strengthening dollar and Chinese growth concerns. Emerging-market assets also fell. The British pound reversed losses as UK Prime Minister Theresa May said she is weighing a plan that would keep the U. bound to European rules for longer.

Here are some key events for the rest of this week:

Third-quarter GDP for China comes Friday in addition to last month’s retail sales and factory output.

These are the main moves in markets: 

Stocks

The S&P 500 Index declined 0.6% as of 10:02 New York time. The Stoxx Europe 600 Index fell. 0.1%. The UK’s FTSE 100 Index fell 0.2%. Germany’s DAX Index dropped 0.2%. The MSCI Emerging Market Index sank 0.8%. The MSCI Asia Pacific Index declined 0.6%.

Currencies

The Bloomberg Dollar Spot Index rose 0.2%. The euro fell 0.1%to $1.1493. The British pound fell 0.1% to $1.3102. The Japanese yen increased 0.1% to 112.56 per dollar.

Bonds

The yield on 10-year Treasuries was steady at 3.20%. Germany’s 10-year yield was little changed at 0.46%. Britain’s 10-year yield increased one basis points to 1.59%, the first advance in more than a week. Italy’s 10-year yield gained four basis points to 3.583%, the highest in more than four years.

Commodities

West Texas Intermediate crude decreased 1.6% to $68.65 a barrel, the lowest in a month. Gold rose 0.1% to $1 223.61 an ounce.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
17.13
(-0.96)
ZAR/GBP
21.50
(-1.37)
ZAR/EUR
19.33
(-0.64)
ZAR/AUD
11.91
(-0.57)
ZAR/JPY
0.16
(-0.78)
Gold
1796.75
(+0.66)
Silver
18.26
(-0.02)
Platinum
839.00
(+2.37)
Brent Crude
43.07
(+0.70)
Palladium
1936.00
(+0.49)
All Share
55243.80
(+0.72)
Top 40
50922.32
(+0.83)
Financial 15
10086.99
(-0.47)
Industrial 25
76855.87
(+0.55)
Resource 10
52017.34
(+1.71)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1725 votes
I am taking a hit, but should be able to recover in the next year
23% - 2261 votes
My finances have been devastated
34% - 3377 votes
It's still too early to know what the full effect will be
25% - 2451 votes
Vote