Global Stocks Dip Amid Political, Trade Tensions
May 23 2019 - 4:04AM
Dow Jones News
By Will Horner
Global stocks slipped Thursday amid political uncertainties in
Europe and tensions in China over a protracted trade standoff with
the U.S.
In Europe, the pan-continental Stoxx Europe 600 fell 0.8% in
early trading, dragged lower by trade-sensitive automotive and
technology stocks. The index's autos & parts and technology
subindexes slipped 2.8% and 1.6%, respectively.
In Asia, markets were broadly lower, with Chinese equities
falling furthest as investors sought to reduce their exposure to
the county. The Shanghai Composite slipped 1.4%, while the
smaller-cap Shenzhen Composite fell 2.4%. Hong Kong's Hang Seng
traded 1.9% lower and Japan's Nikkei lost 0.3%.
The one exception was India's BSE Sensex index, which climbed
0.5%
after investors there cheered early results from the nation's
elections which looked set to return Prime Minister Narendra Modi
to power.
In the U.S., futures pointed to declines of 0.7% for the Dow
Jones Industrial Average and S&P 500 and 1% for the
Nasdaq-100.
The yield on 10-year U.S. Treasurys was also down Thursday at
2.377%, from 2.393% Wednesday. Yields and prices move in opposite
directions.
Investors await the European Parliamentary elections that began
in the U.K. and the Netherlands Thursday. Populist parties are
predicted to perform well across Europe when continentwide results
are announced Sunday.
That could make compromises between European Union governments
less likely and embolden euroskeptics, said Jörg Krämer, chief
economist at Commerzbank.
"After victory in the European elections the parties critical of
the European Union will become even more self-confident," he said
in a recent note. "This will cause nervousness in the market."
The British pound lost another 0.4% against the dollar as a
last-ditch attempt by Prime Minister Theresa May to win support for
her Brexit plan looked unlikely to succeed. The resignation
Wednesday of Andrea Leadsom, the latest cabinet member to quit over
Brexit, further hit sterling.
Uncertainty over the U.S.-China trade dispute--with no date yet
set for further talks--was also making investors pessimistic about
hopes for a resolution, analysts said.
Mixed messages on the issue made it hard for investors to settle
on a likely outcome, said Geoffrey Yu, head of the U.K. Investment
Office at UBS Wealth Management.
"Investors may have trouble focusing on too many narratives at
once. Right now, tensions between the U.S. and its major trading
partners continue to drive stock market volatility," Mr. Yu
said.
Investors were also weighing the latest meeting minutes from the
Federal Reserve, which reinforced the view that the central bank
will leave interest rates unchanged for now. The meeting took place
before the recent flare up in trade tensions.
The WSJ Dollar Index, which tracks the dollar against a basket
of currencies, rose 0.1%.
In commodity markets, oil prices continued to slip after data
Wednesday showed U.S. stockpiles rose. Brent crude fell 1% to
$70.29 a barrel. Gold prices rose 0.1% to $1,275.15 an ounce.
(END) Dow Jones Newswires
May 23, 2019 04:49 ET (08:49 GMT)
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