· Stocks fell sharply on Thursday as investors started to fear the U.S.-China trade war is slowing the economy.
The Dow Jones Industrial Average fell 286.14 points to 25,490.47 as United Technologies lagged. The S&P 500 fell 1.2% to 2,822.24 while the Nasdaq Composite dropped 1.6% to 7,628.28. The Dow fell more than400 points at its lows, but regained some of its losses in the final hour of trading as Intel shares turned around to close 1.2% higher.
The Dow is now down more than 380 points in two days as Wall Street begins to realize the trade war may last a lot longer than previously expected. Bond yields and crude oil also plunged on Thursday as the rising risk spread through other markets. The 10-year yield fell to its lowest since October 2017. The S&P 500 is down more than 4% so far in May along with the Dow.
· As stocks plunged Thursday, Wall Street inboxes were filled to the brim with predictions that the White House would go full throttle and slap tariffs on all Chinese goods, in an escalating and prolonged trade war that could begin to hit consumers and slow global growth.
A number of firms released new reports warning the trade war was getting worse including economists and strategists from Nomura, Goldman Sachs and Bank of America.
“I still think the risk is a full-blown trade war and it’s beginning to look increasingly like one,” said Ed Keon, chief investment strategist at QMA.
Keon said if the trade war escalates, it could push the stock market into a correction of as much as 10% or more. He has moved more assets into cash and has a larger position in Treasury futures, as he awaits a more certain outcome.
· European markets closed sharply lower Thursday amid ongoing U.S.-China trade concerns.
The pan-European Stoxx 600 closed provisionally down by 1.4% with almost every sector in the red. All major bourses were in negative territory, with Britain’s FTSE 100 down 1.4%, while Germany’s DAX and France’s CAC both fell around 1.8%.
· Asia Pacific markets fell in early trade on Friday as investors remained worried over trade tensions between the United States and China.
In Japan, the benchmark Nikkei 225 fell 1.06% while the Topix index was down 1.02%. South Korea’s Kospi was down 0.36%. Australia’s ASX 200 was lower by 0.53% as the heavily weighted financial subindex declined 0.88%.
· “A negative shift (in) the US-China trade negotiations took its toll on the markets,” analysts at ANZ Research said in an early morning note. “China is prepared to hunker down and support its private enterprises rather than yield to the financial pressures being applied by the US.”
Reference: CNBC
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