Global Stocks Resume Their Slide
October 15 2018 - 3:19AM
Dow Jones News
By Avantika Chilkoti
Global stocks dropped on Monday, resuming last week's slump on
concerns around global trade tensions and fresh uncertainty over a
Brexit deal.
The Stoxx Europe 600 was down 0.4%. In Asia, Japan's Nikkei
Stock Average dropped 1.9% while Hong Kong's Hang Seng was down
1.2%.
In the U.S., futures pointed to a 0.4% opening drop for the
S&P 500 and the Dow Jones Industrial Average.
Last week, several global equity indexes recorded their worst
performances since February's rout as a steep spike in bond yields
sparked a selloff in stocks. Investors grew increasingly jittery
over U.S. growth and the prospect of further tightening from the
Federal Reserve.
Though markets seemed to find their footing on Friday, the
downbeat trading continued on Monday.
"I'm starting to seriously worry that markets may trigger an
economic downturn earlier than widely expected, driving a
self-fulfilling market adjustment towards more normal (long-term)
valuations," said Erik F. Nielsen, group chief economist at
UniCredit Bank, in a note to clients. "There is little chance
global policy makers will come to the rescue in time."
In Europe, the risk-off tone was being driven by ongoing
uncertainty around a Brexit deal. The negotiations around the
U.K.'s impending departure from the European Union suffered a fresh
setback Sunday, with the two sides failing to find a compromise on
the issue of the Irish border.
"A no-deal Brexit is likely to further curb growth expectations
and therefore the attractiveness of the U.K.," said Louise Dudley,
Global Equities Portfolio Manager, at Hermes Investment Management,
who is underweight U.K. equities from a European or global context.
"Broadly our expectation is that we are likely to see higher costs
for businesses."
The British pound was down 0.3% against the U.S. dollar.
Meanwhile, the U.S. earnings season was getting into full swing
and investors were training their eyes on retail sales data due
Monday.
The 10-year U.S. Treasury yield ticked up slightly to 3.154%,
compared with 3.140% on Friday. Yields move inversely to
prices.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was down 0.1%.
In commodities, gold was up 0.6%. Brent crude, the global oil
price benchmark, was up 0.6% as tensions between the U.S. and Saudi
Arabia mounted over the suspected killing of a dissident Saudi
journalist in Istanbul.
Write to Avantika Chilkoti at avantika.chilkoti@wsj.com
(END) Dow Jones Newswires
October 15, 2018 04:04 ET (08:04 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.