FYI: Stocks and bond yields around the world fell Friday after President Trump threatened to impose escalating tariffs on Mexico, exacerbating concerns about global growth in an already edgy market.
The tariff threat pushed stock markets down as investors moved to safer assets like government bonds, gold and the Japanese yen. The Mexican peso fell 2.9% against the dollar as investors reacted to concerns about the country’s ability to withstand tariffs from its largest trading partner.
The yield on 10-year U.S. Treasurys declined to 2.158% from 2.227% on Thursday, hitting a fresh 20-month low. Yields on German 10-year bunds fell to minus 0.204%, matching an all-time low reached in July 2016. Dutch 10-year government bond yields turned negative for the first time since October 2016, at minus 0.089%. Yields and prices move in opposite directions.
U.S. futures pointed to opening declines on Wall Street, with the S&P 500 set to fall around 1% and the Dow Jones Industrial Average indicated to open around 0.9% lower, erasing Thursday’s modest gains.
In Europe, the Stoxx Europe 600 was down 0.9% in morning trade, with Germany’s export-heavy DAX index down 1.4% and the U.K.’s FTSE 100 falling 0.9%.
Auto makers and their suppliers, which are highly exposed to trade fluctuations, were among Europe’s biggest losers. The autos and parts subindex of the Stoxx Europe 600 was down 2.4%. Europe’s banks were also in the red, with Deutsche Bank shares falling 2.5% to hit an all-time low of €6.04.
Weakness in Europe followed a largely negative session in Asia, where Hong Kong’s Hang Seng fell 0.8% and Japan’s Nikkei dropped 1.6%, but Korea’s Kospi gained 0.1%.
Mr. Trump said late Thursday that the U.S. would impose escalating tariffs on its southern neighbor starting June 10, unless the country takes action to deter the flow of Central American migrants passing through its borders. The levies could hit 25% by October if Mexico fails to satisfy the White House’s demands.
Regards
Ted
WSJ:
https://www.wsj.com/articles/global-stocks-and-bond-yields-drop-on-mexico-tariff-concerns-11559289992Bloomberg:
https://www.bloomberg.com/news/articles/2019-05-30/asia-stocks-to-steady-treasury-rally-extends-markets-wrap?srnd=premiumIBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-fall-trump-plans-mexico-tariffs-latest-u-s-trade-war/CNBC:
https://www.cnbc.com/2019/05/31/us-stock-futures-fall-after-trump-announces-new-tariffs-on-mexico.htmlReuters:
https://www.reuters.com/article/us-global-markets/global-stocks-decline-bonds-surge-on-trumps-mexico-threat-idUSKCN1T1035U.K.
https://uk.reuters.com/article/uk-britain-stocks/new-trump-tariff-threat-bleak-chinese-data-sink-ftse-100-idUKKCN1T10PREurope:
https://www.reuters.com/article/us-europe-stocks/european-stocks-tumble-as-trump-stokes-recession-fears-idUSKCN1T10QQAsia:
https://www.marketwatch.com/story/asian-markets-mixed-on-new-trade-worries-after-trumps-tariffs-against-mexico-2019-05-30/printBonds:
https://www.cnbc.com/2019/05/31/us-bonds-fresh-trade-tensions-and-recession-fears.htmlCurrencies:
https://www.cnbc.com/2019/05/31/forex-market-us-tariffs-on-mexico-us-china-trade-war-in-focus.htmlOil:
https://www.cnbc.com/2019/05/31/oil-market-us-tariffs-on-mexico-iranian-oil-sanctions-in-focus.htmlGold:
https://www.cnbc.com/2019/05/31/gold-market-trump-mexico-tariffs-us-rate-cut-expectations-in-focus.htmlCuirrent Futures:
https://finviz.com/futures.ashxQuote
