Global Stocks Slide After U.S. Tech Selloff
June 04 2019 - 3:24AM
Dow Jones News
By Nathan Allen
Global stocks declined on Tuesday as concerns about global
growth and a selloff in U.S. tech stocks added to the prevailing
cautious mood among investors.
In Europe, the Stoxx Europe 600 opened 0.2% lower, erasing some
of Monday's gains. Germany's DAX index fell 0.6% and the U.K.'s
FTSE 100 dropped 0.4%.
London-listed Hargreaves Lansdown PLC was the biggest loser on
the FTSE 100, shedding more than 5% in early trade. The investment
manager had directed a number of clients to the Woodford Equity
Income fund, which on Monday said it had suspended redemptions.
The declines followed a downbeat session in Asia, with Hong
Kong's Hang Seng Index down 0.7%, China's Shanghai Stock Exchange
down 1% and Korea's Kospi largely flat.
Australia's S&P ASX 200 was one of the few local bourses to
buck the trend, trading 0.2% higher after the Reserve Bank of
Australia cut interest rates in an effort to offset the negative
effects of trade tensions. The Australian dollar gained 0.2%
against the U.S. dollar.
Government bond yields rose slightly, though they remained under
pressure as money managers continued to pursue haven assets and
switch out of equities. The yield on 10-year U.S. Treasurys was up
to 2.096% on Tuesday, from 2.085% on Monday. The yield on 10-year
German bunds was minus 0.207%.
U.S. futures pointed to opening gains of around 0.1% for the
S&P 500, the Dow Jones Industrial Average and the Nasdaq-100,
clawing back some of Monday's losses.
The tech-heavy Nasdaq dropped 1.6% on Monday, down more than 10%
from its May record, as U.S. regulators geared up to scrutinize
some of the country's largest technology companies, signaling a
potential shift away from the previously laissez-faire attitude
applied to the sector.
Later on, markets will be focusing on a speech by Federal
Reserve Chairman Jerome Powell, as expectations of a rate cut
continue to increase. On Monday the Federal Reserve Bank of St.
Louis President James Bullard said that a lowering of the central
bank's short-term rate target "may be warranted soon" if the
economic slowdown in the U.S. proves sharper than expected.
Elsewhere, Mexico warned that it was considering retaliating
against President Trump's threat to impose tariffs on exports to
the U.S., though it would rather negotiate a solution.
ING's chief economist and head of research for Asia-Pacific,
Robert Carnell, said Mexico's response is significant as it signals
a shift in the largely one-sided U.S. trade disputes. Washington
has placed tariffs on several countries and faced minimal
retaliation, which has helped support the dollar, but this dynamic
is unlikely to continue indefinitely, he said.
"There is certainly scope for the USD to depreciate as countries
decide that they aren't simply going to sit back and take it
anymore," Mr. Carnell said.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was down 0.2%.
In commodities, global oil benchmark Brent crude fell 0.3% to
$61.12 a barrel, while gold gained 0.4%.
Write to Nathan Allen at nathan.allen@dowjones.com
(END) Dow Jones Newswires
June 04, 2019 04:09 ET (08:09 GMT)
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