Stocks down on new trade fears

On Friday stocks slumped and bonds and the yen jumped in the wake of President Donald Trump’s move to escalate the trade war, with China pledging “countermeasures” if the U.S. steps up tariffs on its goods.

U.S. equity futures indicated a weak opening on Wall Street ahead of the monthly payrolls report, though contracts came off earlier session lows. The Stoxx Europe 600 index fell the most since December, led by automakers and miners. Japanese and Korean benchmarks slumped amid a trade spat between the neighbors, with a yen rally also weighing on the former’s stocks. Tenyear U.S. yields fell further and the dollar was little changed after each saw declines Thursday. China’s onshore yuan hit the weakest point since November.

While China has yet to offer details on what measures it would take, the sudden escalation of the trade war has put markets in a spin in an already action-packed week of corporate earnings and central-bank meetings. The developments come after the Federal Reserve chief cast doubt about a long cycle of interest-rate cuts, provoking the president’s ire and disappointing many investors.

The Stoxx Europe 600 Index sank 1.9%, the biggest tumble in eight months. The U.K.’s FTSE 100 Index sank 1.8%, the largest tumble in 19 weeks. Germany’s DAX Index sank 2.5%, the biggest tumble in about six months. The MSCI Asia Pacific Index decreased 1.4% to the lowest in more than six weeks.

The euro rose 0.1% to $1.11. The British pound declined 0.1% to $1.2118, the weakest in more than two years. The Japanese yen climbed 0.5% to 106.85 per dollar, the strongest in almost 16 months.

Britain’s 10-year yield declined four basis points to 0.549%, hitting the lowest in about three years.

Germany’s 10-year yield declined five basis points to 0.50%, reaching the lowest on record.

Gold dipped 0.6% to $1,436.71 an ounce. West Texas Intermediate crude increased 2.6% to $55.35 a barrel.

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.