Geopolitical risks put a damper on global shares as US dollar gains

US stocks declined for a third day as lingering concerns over trade and geopolitical risks offset a report showing the economy cooled by less than expected last quarter. The dollar climbed and Treasury yields increased.

Equities received brief bumps higher after White House economic adviser Larry Kudlow and Treasury Secretary Steven Mnuchin gave optimistic outlooks on the status of trade negotiations with China. Stocks dropped earlier in Europe and Asia as disappointing manufacturing data out of China and an abrupt end to the US-North Korea summit added to a litany of concerns facing investors.

“This report would have given a bigger boost to equities and other risk assets if not for the negative news coming out of Vietnam,” said Chris Gaffney, president of world markets at TIAA Bank in St. Louis.

“This, along with the re-emergence of hostilities between India and Pakistan, has increased the geopolitical risks.”

The 2.6pc annualised rate of gains in gross domestic product from October to December compared with the 2.2pc median estimate of economists surveyed by Bloomberg.

It followed a 3.4pc advance in the prior three months, according to a US Commerce Department report that was delayed a month by the government shutdown.

“This really helps at least reduce imminent recession fears and is just another indicator that the economy certainly slowed down but it looks less recessionary than just a mid-cycle slowdown at this point,” said Jim Paulsen, chief investment strategist at Leuthold Weeden Capital Management in Minneapolis.

“And certainly the bond market’s initial reaction seems to be that way, with it lifting yields for example.’’