World shares drop amid trade-war worries and the US health sector dips

New York — US-driven trade confrontations hurt world stock markets, and US and German debt yields on Thursday, while Wall Street felt the additional brunt of a slump in health sector shares.

Wall Street opened lower amid Amazon’s announcement that it would buy online pharmacy PillPack, moving the e-commerce giant further into the health space. The news sent shares of drug distributors and retailers plummeting.

The S&P health sector index dropped 0.73%, the most among the 11 S&P sectors, while Amazon gained 0.8%. The biggest losses include a 10.5% drop in Walgreens Boots Alliance, a 9.3% tumble in CVS Health, and a 10.1% fall in Rite Aid shares.

Still, gains in financial and technology shares helped US stock indices remain largely flat.

The Dow Jones Industrial Average fell 12.45 points, or 0.05%, to 24,105.14; the S&P 500 gained 1.52 points, or 0.06%, to 2,701.15; and the Nasdaq Composite added 10.90 points, or 0.15%, to 7,455.99.

An escalating trade fight between the US and its major partners, including China, the EU and Canada, has continued to dominate investors’ mindsets, said Craig Erlam, senior market analyst at online forex broker Oanda.

“With Trump picking fights on multiple fronts and no sides showing any willingness to back down, we may have to get used to this risk-averse environment in the near term,” Erlam said.

Like Wall Street a day earlier, European shares and the Chinese yuan suffered after US President Donald Trump and White House economic adviser Larry Kudlow outlined plans to clamp down on Chinese acquisitions of sensitive American technologies.

MSCI’s gauge of stocks across the globe shed 0.30%, while the pan-European FTSEurofirst 300 index lost 0.96%. Asian shares dropped to a nine-month trough and MSCI’s emerging-market index — which includes other hard-hit countries, including Mexico, Brazil, Turkey and SA — was at its weakest in almost a year.

US treasury and German bund yields remained near one-month lows as investors moved into bonds for the guaranteed returns stocks cannot offer. The yield curve between two-year and 10-year US treasury notes traded just above the low of 32 basis points reached on Wednesday, which was the flattest since 2007.

The dollar slipped against a basket of currencies as upbeat German inflation data prompted some traders to buy the euro, and data showing the US economy slowed more than previously estimated in the first quarter weighed on the greenback.

The dollar index, which measures the greenback against a basket of six currencies, was down 0.04% at 95.232, after advancing about 1% over the past two sessions amid continuing tensions between the US and its major trading partners.

Gold steadied after falling to its lowest in more than six months on the higher dollar. A strong greenback makes dollar-priced gold costlier for non-US investors while falling equities, seen as risky assets, usually help safe-haven gold, but they have failed to do so this time.

Oil prices firmed, with US crude near a three-and-a-half-year high as investors eyed the prospect of a big fall in crude exports from Iran due to US sanctions. US crude rose 1.29% to $73.70 a barrel and Brent was last at $77.66, up 0.26% on the day.

Reuters