Global Stocks and Treasury Yields Extend Declines

Global stocks dropped Wednesday as trade tensions and concerns around economic growth continued to dampen risk appetite, sending government bond yields lower.

The yield on 10-year U.S. Treasurys extended its decline to 2.232%, from 2.268% on Tuesday, its lowest level since September 2017. Bond yields and prices move in opposite directions.

In Europe, the Stoxx Europe 600 was down 1% in early trade, with the U.K’s FTSE 100 down 0.9% and Germany’s DAX 1.1% lower.

Luxembourg-based steelmaker ArcelorMittal SA was the biggest loser on the pan-European index, shedding more than 5% after it disclosed plans to cut production in Europe for the second time in a month amid high imports and weak demand.

Asian bourses had a largely gloomy session. Korea’s Kospi closed 1.3% lower, hitting a near five-month closing low, while Japan’s Nikkei fell 1.2%. However, China’s Shanghai Stock Exchange gained 0.2%.

Futures pointed to opening declines for blue-chip U.S. indexes, with the S&P 500 set to fall around 0.6% and the Dow Jones Industrial Average poised to drop 0.5% at the open.

U.S. stocks closed lower Tuesday after President Trump said Monday that a trade deal with China wasn’t likely to be signed soon and that tariffs could be raised once again.

In the latest twist in the U.S.-China trade spat, Huawei Technologies Co. filed a motion with a Texas court seeking to overturn a law that limits federal spending on its products over national-security concerns. Huawei said U.S. officials have failed to provide sufficient evidence that its products pose a security threat.

Meanwhile, an unnamed Chinese official suggested Beijing could be prepared to restrict exports of rare-earth elements to hit back against U.S. tariffs. China is the global leader in production of the materials, which are used in many technology products.

Earlier, the U.S. Treasury declined to label China a currency manipulator in its semiannual report, but said it remained concerned about the nation’s currency practices.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was flat.

In commodities, Brent crude oil dropped 0.9% to $68.03 a barrel as data showed U.S. crude stockpiles are growing at their fastest rate since 2016, fueling concerns of oversupply.

Gold gained 0.5% to $1,282.90 a troy ounce.
Souce: Dow Jones