Global stocks fall as investors seek ‘havens’

Global markets dropped as investors sought the relative safety of Treasuries amid fears over persistent trade tensions between the US and China and concerns about a slowing global economy.

The S&P 500 opened 0.7 per cent lower on Wall Street, following European and Asian markets.

The broad Stoxx 600 index in Europe deepened declines during the day and recently traded 1.5 per cent lower, taking its losses for this month to more than 5 per cent as it headed for its biggest monthly drop since December. The Frankfurt-based Dax and London’s FTSE 100 fell 1.5 per cent.

Oil prices also fell as Brent crude shed 2 per cent to $68.82 a

barrel. Last week the benchmark price had its biggest decline of the year to hit a two-month low.

Trade frictions between the world’s biggest two economies have shown little signs of cooling off. On Tuesday, China’s powerful planning body threatened to use rare earths exports as leverage in the trade war. That came after Donald Trump, the US president, said in Tokyo that the US was not ready to reach a trade deal with China.

But the US Treasury stopped short of declaring China a currency manipulator in its twiceyearly report on foreign exchange practices, a move that avoided ratcheting tensions a notch higher.

Investors have sought safety in Treasuries, with yields on US 10-year sovereigns sliding to their lowest level since September 2017. Bond yields fall as their prices rise.

German sovereign bonds also rallied, sending yields on 10-year Bunds to a two-and-a-half-year low of minus 0.169 per cent. Investors also moved into UK government bonds, sending the yield on 10-year gilts to its lowest level since October 2016.

Paul Donovan, chief economist of UBS Wealth Management, said: “The uncertainty caused by trade policy is likely to continue to delay investment, slowing economic growth. It is logical for bond markets to react to this. It is not logical to price in a recession.”

Japan’s Topix index fell 0.9 per cent, Australia’s S&P/ASX 200 was down 0.7 per cent and South Korea’s Kospi dropped 1.3 per cent. China’s CSI 300 and Hong Kong’s Hang Seng fell 0.2 per cent and 0.5 per cent respectively.