You are here: Home » Reuters » News
Business Standard

Global Markets: Trade war concerns flatten yields, roil stocks

Reuters  |  NEW YORK 

By Nick Brown

(Reuters) - Simmering fears of a global trade war on Wednesday overshadowed robust data from and kept government yields low in the U.S. and Europe, with U.S. stocks sinking into the red amid a drop in industrial shares.

U.S. on Tuesday fired Rex Tillerson, seen as a free-trade proponent, replacing him with the more hawkish former

Later on Tuesday, reported that the U.S. was seeking to impose tariffs on up to $60 billion of Chinese imports.

The contributed to a continued flattening on Wednesday of the U.S. yield curve, a move also aided by a third consecutive monthly decrease in data.

The spread between five-year notes and 30-year bonds, an indicator of the shape of the yield curve, lowered to 44.9 basis points on Wednesday, 3 basis points below its last close.

Benchmark 10-year notes last rose 11/32 in price to yield 2.8079 percent, from 2.848 percent late on Tuesday.

"Long-term, continuing rate hikes will keep the flattening going," said Michael Cloherty, at in New York, though in the short-term, he said, "we're a little flatter than we should be."

In Europe, high-rated government yields edged higher but remained near recent lows. German 10-year government yields seesawed in midday trades, falling to a one-and-a-half-month low at 11:25 a.m. ET.


Positive from spurred higher openings on Wall Street, but the main stock indexes could not weather political fears as trading wore on.

reported industrial output expanding at a surprisingly faster pace at the start of the year. Fixed asset investment also beat forecasts, while improved.

That came on the heels of consumer price data on Tuesday that pointed to annual U.S. core inflation steady at 1.8 percent, cementing investors' expectations that the Federal Reserve would not raise rates more than three times in 2018.

But dips in industrial stocks, including a 4.4 percent drop in shares of sent U.S. stocks reeling in morning trading.

The Dow Jones Industrial Average <.DJI> fell 240.62 points, or 0.96 percent, to 24,766.41, the <.SPX> lost 11.3 points, or 0.41 percent, to 2,754.01 and the <.IXIC> dropped 20.44 points, or 0.27 percent, to 7,490.58.

"The market is still trying to weigh concerns about tariffs on one hand and understanding how the acts and how he speaks openly and comes up with a different policy in the end," said Robert Pavlik, at

The pan-European index <.FTEU3> lost 0.10 percent and MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 0.39 percent.

Emerging market stocks lost 0.49 percent. MSCI's broadest index of shares outside <.MIAPJ0000PUS> closed 0.34 percent lower, while Japan's Nikkei <.N225> lost 0.87 percent.

The Chinese data spurred an early spike for oil, before prices dropped later.

U.S. crude fell 0.36 percent to $60.49 per barrel and Brent was last at $64.50, down 0.22 percent on the day.

In currencies, the dollar index <.DXY> rose 0.18 percent, with the euro down 0.26 percent to $1.2357.

The Japanese yen strengthened 0.38 percent versus the greenback at 106.17 per dollar, while sterling was last trading at $1.3928, down 0.22 percent on the day.

(Additional reporting by Sujata Rao, and Kate Duguid; Editing by Bernadette Baum)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, March 15 2018. 00:50 IST