(Bloomberg) -- Stocks fell as investors digested the most recent twists in the topsy-turvy trade talks between the U.S. and China. Treasuries rose, while the dollar was little changed.
The S&P 500 fell for the third time in four sessions after Chinese officials questioned statements by President Donald Trump about trade discussions between the two countries. Banking shares led losses after the 10-year Treasury yield fell below 1.50%. Philip Morris International Inc. paced the decline after the company confirmed it was in merger talks with Altria Group Inc. Tech companies also helped pull down indexes, with Apple Inc. a top loser.
The euro fell following data showing Germany was on the brink of a recession, and the pound gained as opposition politicians stepped up efforts to prevent a no-deal Brexit. West Texas crude pared gains to trade around $54 a barrel.
Trump’s apparent deescalation of trade tensions at the G-7 had helped ease investors nerves before Beijing questioned some of those comments. Adding to that is the underlying caution about the global economy as Germany offered up fresh evidence that protectionism is weighing on global growth. Volatility remains relatively high as traders reflect on previous periods of calm in the trade war that were quickly ended by surprises.
“From Friday to now has been just head-spinning on the trade issue,” said David Donabedian, chief investment officer of CIBC Private Wealth Management. “I think the market rally was not so much because they took the president’s statement literally about China’s desire to get a deal done. I think it’s because they looked at the president’s statement and concluded he’s more anxious to get a deal done.”
Elsewhere, Hong Kong Chief Executive Carrie Lam said her government can handle unrest without assistance from Chinese forces, and still wants to hold talks with protesters despite a flare-up in violence.
Events to keep an eye on this week:
- The second reading of Q2 U.S. GDP Thursday is expected to refine estimates of slightly lower economic growth.
- Bank of Korea policy decision and briefing is on Friday.
- Euro-zone CPI data for August is also due Friday.
Here are the main moves in markets:
Stocks
- The S&P 500 Index fell 0.2% as of 12:23 p.m. New York time.
- The Stoxx Europe 600 Index increased 0.6%.
- The MSCI Asia Pacific Index advanced 0.6%.
Currencies
- The Bloomberg Dollar Spot Index was little changed.
- The euro was little changed at $1.1099.
- The British pound gained 0.3% to $1.1101.
- The Japanese yen increased 0.1% to 106.03 per dollar.
Bonds
- The yield on 10-year Treasuries declined three basis points to 1.50%.
- The yield on two-year Treasuries fell less than one basis point to 1.53%.
- Germany’s 10-year yield decreased two basis points to -0.69%.
- Britain’s 10-year yield gained five basis points to 0.53%.
Commodities
- Gold advanced 0.4% to $1,543.60 an ounce.
- West Texas Intermediate crude climbed 1.3% to $54.33 a barrel.
--With assistance from Andreea Papuc and Laura Curtis.
To contact the reporters on this story: Randall Jensen in New York at rjensen18@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net
To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Todd White
©2019 Bloomberg L.P.
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2019-08-27 13:11:00Z
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