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Tech Drags on U.S. Indexes Amid Trade Jitters: Markets Wrap

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U.S. equities sank as the fallout from the White House’s moves against Chinese telecom giant Huawei battered technology shares and stoked trade jitters.

The S&P 500 Index slid in New York Monday, led in part by semiconductor companies. Advances in financial shares and gains in the energy sector — fueled by a rise in the price of oil — helped offset some of the losses. Ten-year Treasury yields rose before a slew of U.S. data this week as well as Federal Reserve policy-meeting minutes on Wednesday.

Markets remain on edge as the trade war develops, with the impact of President Donald Trump’s threats to choke Huawei Technologies Co. reverberating across the global supply chain on Monday and hitting some of the biggest component-makers. Trump said in an interview he was “very happy” with the trade war and that China wouldn’t become the world’s top superpower under his watch.

“People are starting to come around to the idea that maybe these tariffs will be around a bit longer than anticipated, that we’re not going to basically create a trade compromise, a trade deal with China, in a very short period of time,” said Crit Thomas, global market strategist at Touchstone, which has about $18 billion in assets under management. “And certainly, Huawei is complicating and inflaming some of these concerns around trade.”

Software and semiconductor shares helped pull the Stoxx Europe 600 index lower. Equities fell in Hong Kong and China, though the offshore yuan held steady, signaling some relief after trade turmoil had dragged the currency to a five-month low. The euro edged higher following five days of declines as elections for the European Parliament approached.

Crude climbed after Saudi Arabia and other key producers in OPEC signaled their intention to keep oil supplies constrained for the rest of the year, while pledging to prevent any genuine shortages.

Shares in India surged as exit polls showed Prime Minister Narendra Modi was poised to retain power. And they rallied in Australia along with the nation’s currency after a surprise election victory for conservative Prime Minister Scott Morrison.

Here are some notable events coming up:

On Tuesday, Bank of England Governor Mark Carney testifies to Parliament about the May inflation report on Tuesday, and Reserve Bank of Australia Governor Philip Lowe speaks in Brisbane.The Fed minutes of its FOMC April 30-May 1 policy meeting will be released Wednesday.Counting of votes from the Indian general elections takes place Thursday as Prime Minister Narendra Modi attempts to secure a second term. ECB President Mario Draghi speaks in Frankfurt on Wednesday.The European Parliament holds continent-wide elections May 23-26.On Thursday, the ECB publishes its account of the April monetary policy decision.

And these are the main moves in markets:

Stocks

The S&P 500 Index fell 0.5% as of 12:03 p.m. New York time; the Nasdaq 100 dropped 1.4%.The Stoxx Europe 600 Index fell 1.1%, its biggest drop in a week.The U.K.’s FTSE 100 Index sank 0.5%The MSCI Emerging Market Index declined 0.2% to the lowest in over four months.

Currencies

The Bloomberg Dollar Spot Index sank 0.1%, the biggest drop in over a week.The euro increased 0.1% to $1.1169.The British pound fell less than 0.05% to $1.2719.The Japanese yen rose 0.1% to 109.98 per dollar.

Bonds

The yield on 10-year Treasuries rose one basis point to 2.40%.Germany’s 10-year yield gained two basis points to -0.09%, the largest advance in three weeks.Britain’s 10-year yield climbed two basis points 1.055%.

Commodities

Gold fell less than 0.05% to $1,276.92 an ounce.West Texas Intermediate crude gained 0.6% to $63.11 a barrel, the highest in almost three weeks.

–With assistance from Cormac Mullen, Adam Haigh and Todd White.

To contact the reporters on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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