Friday, 14 December, 2018

Renewed jitters over trade send stocks, bond yields lower

US markets sink on worries over slowing growth, trade truce outcome Dow plunges nearly 800 pts: Aus share to drop at open
Ginger Lawrence | 06 December, 2018, 04:29

The sharp drop in yields hurt banks because it makes it harder to earn money from lending.

Financial shares .SPSY , which are particularly sensitive to bond market swings, dropped 4.4 percent.

The S&P 500 index closed at 2,700, down 90 points or 3.24 percent. Ten-year yields are below 3 percent.

TAKING A BITE: Apple fell 2.1 percent to $180.94 after the consumer electronics giant was downgraded by HSBC analysts, citing the possibility that iPhone volume and value growth may moderate due to a saturated mobile phone market. US stocks veered sharply lower in afternoon trading today, pulling the Dow Jones Industrial Average down 700 points. Bond prices rose, sending yields sharply lower.

Asian markets closed mixed, Tokyo's Nikkei fell 2.4per cent, Hong Kong's Hang Seng increased 0.3 per cent and China's Shanghai Composite was up 0.4 per cent. The FTSE 100 index of leading British shares slid 0.4 percent. The Dow plunged 799.36 points, or 3.1 percent, to 25,027.07, more than erasing its 488-point gain over the previous two trading days.

The trade-sensitive industrial sector .SPLRCI fell 4.4 percent, with Boeing BA.N and Caterpillar CAT.N declining 4.9 percent and 6.9 percent, respectively.

"You have the drop in bond yields and the implications on growth going forward", said Willie Delwiche, investment strategist at Baird.

A note from S&P Global Ratings predicted that United States growth would slow from 2.9 per cent in 2018 to 2.3 per cent in 2019 and 1.8 per cent in 2020, adding that the United States was nearing the "latter" stages of a multi-year growth cycle.

USA stock trading was closed to mourn the death of former President George H.W. Bush.

Bank of America fell 5.1 percent.

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Encana Corp. lost 3.6 per cent, while Crescent Point Energy Corp. was down 2.3 per cent.

Global stock prices fell Wednesday, though not as much as Wall Street the day before, amid confusion about what the USA and China agreed to in a tariff cease-fire.

Technology companies, banks and industrial stocks accounted for much of the sell-off as traders moved assets into the relative safety of USA government bonds, driving yields sharply lower.

The S&P 500 index slid 79 points, or 2.9 percent, to 2,710 as of 1:29 p.m.

European markets fell on Tuesday, with Germany's DAX losing 1.1 percent and France's CAC 40 dropping 0.8 percent. The S&P ASX/200 in Australia gave up 1 percent.

The movements in the bond market "clearly show that growth is likely to slow next year and inflation too", said Karl Haeling of LBBW.

Stocks are opening lower on Wall Street, led by losses in technology companies and banks.

Apple lost 1.7 per cent early Tuesday and Bank of America was down 1.3 per cent.

DISAPPOINTING DOLLAR: Discount retail chain Dollar General slid 5.6 percent to $105.50 after the company reported weak quarterly results. The Russell 2000 index gave up 68.21 points, or 4.4 percent, to 1,480.75.