Stocks stumbled again yesterday, as jitters about a US-China trade war and regulatory crackdown on tech firms, such as Facebook, left investors facing their first quarterly fall in equity markets in two years.
The tech-heavy Nasdaq Composite index opened in the red in the United States and MSCI’s gauge of stocks across the globe shed 0.51 per cent, all of which was enough to send traders piling back into the safety of bonds.
Safe-haven 10-year US Treasury notes rose in price to yield 2.75 per cent, the lowest yields since early February’s market meltdown, sharply shrinking the closely watched difference between spreads on the 10-year note and two-years at nearly 2.27 per cent.
German Bunds, seen as Europe’s most secure asset due to Berlin’s triple-A-rated finances, rallied hard to send 10-year yields back under 0.5 per cent for the first time since early January.
The rout in stocks came after tech woes had given the Nasdaq its worst day since June 2016 on Tuesday. Losses were extended after China’s State-run Global Times reported that Beijing would soon announce a list of retaliatory tariffs on United States imports.
The Dow Jones Industrial Average rose 33.41 points, or 0.14 per cent, to 23,891.12, the S&P 500 lost 2.63 points, or 0.10 per cent, to 2,609.99 and the Nasdaq Composite dropped 54.43 points, or 0.78 per cent, to 6,954.37.
The pan-European FTSEurofirst 300 index rose 0.20 per cent. Asia tumbled 1.5 per cent, with Japan’s Nikkei ending down 1.3 per cent and top Chinese internet stock Tencent down 4.6 per cent.
Since hitting a record on January 26, world stocks have been battered by worries about rising inflation, the pace of US interest rate hikes and the possibility of a global trade war. The 47-country MSCI global index is down more than eight per cent from its high.
In the currency market, the dollar got some respite from its recent sell-off as revised fourth-quarter US economic growth data slowed less than previously estimated and revealed the biggest gain in consumer spending in three years.
The dollar index rose 0.46 per cent, and the Japanese yen weakened 0.81 per cent versus the greenback at 106.22 per dollar.
Dollar gains put pressure on commodities. Spot gold dropped 1.0 per cent to $1,331.48 an ounce.
Benchmark Brent oil was last at $69.08, down 0.55 per cent on the day as a report of increasing US crude inventories from industry group American Petroleum Institute (API) surprised many traders.