New York: Stocks retreated globally as concern grew over the escalating protectionist standoff between China and the US, and as political risks stacked up in Europe. Brent oil reversed losses before a key Organisation of Petroleum Exporting Countries (Opec) meeting this week, while Treasuries gained and the dollar steadied.
The Dow Jones Industrial Average was down 1 per cent in early trading, the S&P 500 was down 0.8 per cent and the Nasdaq was off by 0.9 per cent.
Losses were across the board. Machine maker Caterpillar shed 1.3 per cent, chip maker Intel dropped 3.2 per cent and biotech company Biogen dropped 4.6 per cent.
With investors worried about a trade war, bonds rose. The yield on the 10-year Treasury fell to 2.91 per cent.
All industry sectors were in the red as the Stoxx Europe 600 Index headed for its biggest two-day decline since March.
Japan’s Topix Index fell the most in almost three weeks as the yen edged higher and after an earthquake hit Osaka, one of the country’s industrial heartlands. Markets were closed for holidays in China and Hong Kong. Brent crude futures headed higher as Opec was said to discuss a smaller-than-expected increase in production.
Global trade is firmly back at the top of the agenda, with investors fretting about the intensifying confrontation between the US and China. The Asian nation swiftly responded after President Donald Trump slapped tariffs on $50 billion (Dh183.65 billion) of imports, putting an additional 25 per cent levy on $34 billion of US agricultural and auto exports starting July 6.
“Up to now it’s been hypothetical. Action has been taken, tariffs are coming and you need to pay very, very careful attention to the impact it’s going to have on your holdings,” Bank of Singapore Chief Investment Officer Johan Jooste told Bloomberg Television.
“There are too many unknowns right now to be terribly specific. The thing you do know is risk is higher. The market will take something of a cautionary stance.”
Meanwhile in Europe, German Chancellor Angela Merkel and British Prime Minister Theresa May both face crunch weeks over migration and Brexit, respectively. The euro fluctuated between gains and losses and the pound weakened.
