Dow Plunges As Wall Street Reacts To Trade Doubt, US Economy Concerns

Marco Green
August 13, 2019

European stocks slipped, Asian shares slumped and US equity futures fluctuated on Tuesday as turmoil in Hong Kong and Argentina spooked investors already on edge over the trade war.

The trade headlines sparked demand for risk assets that had been under pressure for more than a week as investors grew increasingly concerned the spat with China would slam global growth.

US stocks rallied after the Trump administration said it will delay tariffs on some Chinese goods until December, while Treasuries fell after a pickup in inflation dented arguments for cutting interest rates.

"The global economy is perched precariously, hoping for a positive inflection, but braced for a stumble", said Vishnu Varathan of Mizuho Bank in a report.

The benchmark Shanghai Composite Index fell 0.63 per cent, or 17.73 points, to 2,797.26, while the Shenzhen Composite Index, which tracks stocks on China's second exchange, shed 0.69 per cent, or 10.36 points, to 1,498.63.

Seoul's Kospi lost 0.7% to 1,928.80, while Sydney's S&P-ASX 200 was 0.3% lower at 6,579.70. NY time.The Stoxx Europe 600 Index rose 0.5%.The MSCI Asia Pacific Index decreased 1.3%.The MSCI Emerging Market Index decreased 1.3%.

Shares fell across the region led by Japan and Hong Kong, where stocks reacted to protesters bringing the city's airport to a standstill on Monday. The selling was widespread, with technology companies and banks accounting for a big share of the decline.

The flight from risk sent gold prices up 1%, hovering at a more than six-year high. The S&P 500 Index retreated for a second day and now sits nearly 5% below its all-time high. The Dow fell 1.5%, or 389.73 points, to 25,897.71.

Declining issues outnumbered advancing ones on the NYSE by a 2.33-to-1 ratio; on Nasdaq, a 2.10-to-1 ratio favoured decliners. Trump's pledge to tax the remaining $300 billion worth of Chinese imports goes into effect on September 1.

Companies releasing results include China's JD.com, Tencent and Alibaba; Cisco, Walmart and Nvidia of the U.S.; the U.K.'s Prudential; Australia's Telstra; Europe's Swisscom and brewer Carlsberg.The U.S. consumer price index, out Tuesday, probably picked up to a 1.7% annual pace in July, according to economist estimates. With the USA and China offering no respite to their trade war and a slew of data pointing to slowing global growth, traders will look to this week's euro-zone GDP figures and industrial production reports from both China and America for further clues to the outlook.

The Stoxx Europe 600 Index fell for a third day, dragged down by industrial and banking shares, while contracts on the three major USA equity indexes swung between gains and losses. Brent crude, used to price worldwide oils, declined 19 cents to $58.38 per barrel in London. It added 4 cents the previous session to $58.57.

The dollar fell to 105.27 Japanese yen from 105.57 yen on Friday.

Other reports by Click Lancashire

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