Stocks down on trade war worries

On Friday stocks fell and bonds gained as trade tensions between the U.S. and China escalated, while investors weighed diverging monetary policies from the Federal Reserve and European Central Bank.

Futures on the S&P 500 dropped and the Stoxx Europe 600 Index edged lower, erasing an earlier advance, after a mixed session in Asia. Treasury yields dipped and Italian debt led a rally in European bonds triggered by the ECB ruling out a rise in interest rates until the second half of 2019, a day after the Federal Reserve said American policy makers will continue with gradual hikes. The euro gained and the dollar was steady.

Traders are also bracing for the expected approval of U.S. import tariffs on $50 billion of Chinese goods, in a move that China has said it will respond to in kind. Reports suggested the U.S. is preparing a second list of tariffs on Chinese goods worth as much as $100 billion. Chinese stocks fell, with the Shanghai Composite gauge closing at its lowest level since September 2016. Japanese equities rose amid a weaker yen as the Bank of Japan downgraded its assessment of inflation.

Emerging markets remain under pressure as worries about an overhaul of Argentina’s central bank leadership saw a plunge in its currency. South Korea’s won and Thailand’s baht led declines Friday. Meanwhile, Russia’s ruble edged lower against the dollar before a central-bank rates decision.

Elsewhere, WTI crude slipped, though still on track for a weekly gain, as a halt in loading from two key ports in Libya offset concerns about a phase-out of supply limits by OPEC and allied producers.

The Stoxx Europe 600 Index decreased 0.2 percent as of 11:06 a.m. London time. The U.K.’s FTSE 100 Index sank 0.7 percent. Germany’s DAX Index fell 0.1 percent. The MSCI Asia Pacific Index fell 0.2 percent to 172.75. Futures on the S&P 500 Index sank 0.4 percent.

This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.