Tweety Bird's renewed tariff threats and the markets

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jserraglio
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Joined: Sun May 29, 2005 7:06 am
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Tweety Bird's renewed tariff threats and the markets

Post by jserraglio » Fri Aug 02, 2019 5:00 pm

WALL STREET JOURNAL

U.S. Markets
Major indexes continue to slide on potential for U.S. to extend levies to essentially all Chinese imports
U.S. stocks capped their worst week in months with another decline Friday, as investors overlooked an in-line jobs report and focused on threats by President Trump to extend tariffs to essentially all Chinese imports.
The escalation in trade tensions sent major stock indexes around the world tumbling and sparked the worst one-day drop in oil prices since 2015 on Thursday. As investors sold stocks, they flocked to assets viewed as safe, such as government bonds, the U.S. dollar and gold.
On Friday, the S&P 500 fell 21.51 points, or 0.7%, to 2932.05 while the Dow Jones Industrial Average lost 98.41 points, or 0.4%, to 26485.01. The S&P 500 ended the week down 3.1%, its worst performance since December, while the blue-chip index finished 2.6% lower, its worst week since May. Shares of trade-exposed companies, such as chip-makers, were among the biggest losers, and the tech-heavy Nasdaq Composite lost 107.05 points, or 1.3%, to 8004.07 and ended the week 3.9% lower.
Benchmarks in Japan and Hong Kong retreated more than 2%, while stocks also dropped in countries that are big trading partners with China, such as Germany and France, and could be impacted by slowing growth there. Yields on all German debt, considered a European safe haven, were in negative territory at one point Friday.
The yield on the 10-year U.S. Treasury note fell to 1.864% from 1.894% on Thursday, its lowest yield since before the 2016 presidential election. In the months following the election, yields rose as investors bet that big tax cuts and infrastructure spending would stimulate growth and inflation. All those gains have since disappeared.
“The heightened trade war with China is not helping the market and investor confidence,” said Weston Boone, managing director of equity trading at Stifel, Nicolaus & Co. Traders’ reluctance to hold stocks heading into a weekend when there could be updates from Mr. Trump or China about tariffs also pressured indexes Friday, he added.
“We’re not seeing a whole lot of reasons for investors to buy the market right now,” he said.
Friday followed one of the most volatile days in months for U.S. stocks and bonds, triggered by a surprise announcement by Mr. Trump that effective Sept. 1 the U.S. would place new tariffs on $300 billion in Chinese goods—including smartphones, clothes, toys and other consumer products. They would come on top of tariffs already imposed on $250 billion in imports from China.
It would be very hard for China to “sit back and do nothing,” said Georgina Taylor, fund manager at Invesco, adding that the tariffs were probably a surprise as the country had appeared to be “thinking more strategically and more long term.”
Some analysts and traders are bracing for even more mayhem in markets.
John Brady, managing director at futures brokerage R.J. O’Brien & Associates, said that although he closely follows the monthly reading on the U.S. labor market, it’s less important for traders on a day like Friday.
U.S. employers added 164,000 jobs in July, the Labor Department said Friday, and the jobless rate held steady at 3.7%. Economists surveyed by The Wall Street Journal had anticipated 166,000 jobs added and an unemployment rate of 3.6%. Stock futures barely reacted to the data.
“For markets, the economic data has now taken a back seat, and global trade policy is riding shotgun,” Mr. Brady said.
President Trump’s tariff announcement came after the Federal Reserve cut interest rates this week for the first time since the financial crisis. The cut was viewed as a pre-emptive move against worsening global growth in part related to the U.S.-China trade dispute.
“This latest trade salvo by President Trump just after the Fed cut certainly took the market by surprise,” said Eli Lee, head of investment strategy at Bank of Singapore. He said the new tariffs could do more harm than previous rounds of levies and said he was particularly concerned about the consumer sector.
The Nikkei 225 declined 2.1% on Friday, ending the week 2.6% lower. The Hang Seng dropped 2.3%, putting its weekly loss at 5.2%, its largest one-week decline since February 2018.
In Europe, the Stoxx Europe 600 fell 2.5%, its biggest drop since December, led by losses in the basic resources and autos sectors. The benchmark index ended the week 3.2% lower.
In commodities, U.S.-traded crude oil ended a roller-coaster week down 1%. The oil benchmark rose 3.2% to $55.66 a barrel on Friday, a day after suffering its largest one-day decline since February 2015. Gold gained 1.7% Friday.
MORE
• Germany’s Longest Bond Goes Negative fir First Time
• U.S. Government Bond Yields Hover Near Multiyear Lows
• Trump Warns of New China Levies
• Pompeo Brands Beijing an Economic Bully
• Heard on the Street: Trump, China and the Fed
• Chinese Yuan Skids to 2019 Low
Lauren Almeida and Joanne Chiu contributed to this article.
Write to Corrie Driebusch at corrie.driebusch@wsj.com and Steven Russolillo at steven.russolillo@wsj.com

Rach3
Posts: 1437
Joined: Tue Apr 03, 2018 9:17 am

Re: Tweety Bird's renewed tariff threats and the markets

Post by Rach3 » Fri Aug 02, 2019 9:06 pm


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