Trade concerns weigh on world stock markets

New York — Equity indices on Wall Street and around the world fell on Thursday as trade concerns weighed on investors, taking the pep out of a recovery in many markets earlier in the day.

Washington is set to announce plans to slap tariffs on EU steel and aluminium imports as early as Thursday morning, sources said, while the US commerce secretary said any escalation of a trade dispute would depend on the bloc’s reaction.

This helped deflate or, in some cases, erase earlier gains in global stock markets and a euro that was seeming to move past concerns about the Italian government.

The Dow Jones Industrial Average fell 220.08 points, or 0.89%, to 24,447.7, the S&P 500 lost 10.96 points, or 0.40%, to 2,713.05, and the Nasdaq Composite dropped 0.45 points, or 0.01%, to 7,462.00.

The pan-European FTSEurofirst 300 index lost 0.49%. Germany’s DAX 30 sank 1.27% on reports that US President Donald Trump aimed to push German car makers out of the US.

MSCI’s gauge of stocks across the globe shed 0.16% after a stronger showing earlier.

“Flows should benefit treasuries versus equities … especially with all the tariff issue headlines hitting the tape,” Andrew Brenner, partner at National Alliance Capital Markets, said in a note.

China lashed out at the renewed threats from the White House on trade and warned it was ready to fight back, days ahead of a planned visit by US commerce secretary Wilbur Ross.

Markets have been wrestling this week with the implications of an Italian governing crisis, which sent its government bonds spiraling down earlier this week and hit the euro and other risk assets. But Italian leaders made new efforts to form a government.

Italy’s two-year government bond yield, which has been the focus of the sell-off, was back down to 1.3% after hitting near-five-year highs of 2.7% on Tuesday.

The euro climbed 0.15% to $1.1678 after its biggest jump since early January on Wednesday.

After a high-volume move into safe-haven 10-year US treasury notes earlier this week, those bonds last rose an additional 3/32 in price to yield 2.8332%, from 2.844% late on Wednesday. This was despite data showing US consumer spending rose more than expected in April while inflation continued to rise steadily.

The dollar index fell 0.19%, and emerging-market stocks saw gains, rising 0.79%. The euro’s rise came as two polls in Italy showed 60% to 72% of respondents wanted the country to remain part of the euro. Markets have been concerned about the prospect that populist parties there could push to leave the currency.

In commodity markets, Brent crude prices reversed earlier losses to hit their biggest premium to US futures in more than three years on Thursday, as the prospect of more inventory increases weighed heavily on West Texas Intermediate (WTI) prices.

US crude stockpiles rose by 1-million barrels in the week to May 25, according to the American Petroleum Institute (API), while analysts had expected a drop. US. crude fell 1.52% to $67.17 a barrel and Brent was last at $78.21, up 0.63%.

Reuters