Stocks Extend Decline, Roiled by Tariffs, Kuroda: Markets Wrap

• March 01 2018
• Robert Brand, Adam Haigh

Stocks in Europe built on losses in the U.S. and Asia, where talk of an end to stimulus by Japan’s central bank added to investors’ concerns about global growth that already were kindled by a more hawkish Federal Reserve and risk of a trade war.

Stocks in Europe built on losses in the U.S. and Asia, where talk of an end to stimulus by Japan’s central bank added to investors’ concerns about global growth that already were kindled by a more hawkish Federal Reserve and risk of a trade war.

The Stoxx Euro 600 Index dropped for a fourth day, with Germany’s DAX gauge falling to a six-month low as carmakers slumped. Japan led the retreat in Asia, with the Topix Index deepening losses after Bank of Japan Governor Haruhiko Kuroda said a possible exit from its extraordinary easing policy may be discussed in 2019. The yen surged to its highest since 2016. Shares in Hong Kong, China, Australia and South Korea were also weaker after U.S. stocks posted a third day of declines.

U.S. President Donald Trump promised to impose substantial tariffs on foreign metal imports and European Commission President Jean-Claude Juncker said Europe will respond “firmly” to any new tariffs. Treasuries retreated and German bunds climbed. The dollar inched lower.

“We’re entering a period of turbulence,” Sebastien Page, head of asset allocation at T. Rowe Price, told Bloomberg TV from Baltimore. “So at the margin we are taking away from equities, adding both bonds and cash.”

Read more how shell-shocked traders find trade angst is latest market menace

The Cboe Volatility Index is up about 40 percent this week as Fed chair Jerome Powell opened the door to speculation that the central bank may quicken the pace of monetary tightening, a move investors worry could derail economic growth. In his Senate testimony Thursday, he called for gradual interest rate hikes and said the economy wasn’t overheating.

Read more on tariffs on steel and aluminum imports proposed by Trump

Elsewhere, oil declined amid concerns about increasing U.S. crude production. Bitcoin steadied at about $11,000, on course to post a 10 percent increase this week.

Terminal users can read more in our markets blog.

Here are some key events scheduled for the remainder of this week:

• Bank of England Governor Mark Carney speech for the inaugural Scottish Economics Conference.
• U.K. Prime Minister Theresa May delivers a speech Friday on Britain’s relationship with the European Union.
• China’s annual national legislative meetings start Saturday and are set to run over two-plus weeks.
• Italy goes to the polls on Sunday. Read more on how Italian bond spreads could widen substantially should a euroskeptic alliance come to power.

These are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index decreased 1.1 percent as of 9:09 a.m. London time, the lowest in more than two weeks.
• Futures on the S&P 500 Index declined 0.1 percent.
• The U.K.’s FTSE 100 Index fell 0.6 percent to the lowest in three weeks.
• Germany’s DAX Index dipped 1.7 percent to the lowest in six months.
• The MSCI Asia Pacific Index fell 0.9 percent as of 4:07 p.m. Tokyo time.
• Japan’s Topix index declined 1.8 percent, Hong Kong’s Hang Seng Index fell 1.6 percent, and South Korea’s Kospi dropped 1 percent.
• Australia’s S&P/ASX 200 Index fell 0.7 percent.

Currencies

• The Bloomberg Dollar Spot Index decreased 0.1 percent.
• The euro gained less than 0.05 percent to $1.2268.
• The British pound rose 0.1 percent to $1.3783.
• The Japanese yen increased 0.5 percent to 105.68 per dollar, the strongest in almost 16 months.

Bonds

• The yield on 10-year Treasuries gained one basis point to 2.81 percent.
• Germany’s 10-year yield fell three basis points to 0.64 percent, the lowest in five week.
• Britain’s 10-year yield fell two basis points to 1.467 percent, the lowest in five weeks.
• Japan’s 10-year yield gained three basis points to 0.068 percent, the highest in more than two weeks on the largest rise in more than 14 months.

Commodities

• West Texas Intermediate crude dipped 0.4 percent to $60.75 a barrel, the lowest in more than two weeks.
• Gold declined less than 0.05 percent to $1,316.71 an ounce.
• LME copper fell 0.1 percent to $6,914.50 per metric ton, the lowest in more than two weeks.