Stocks drop as trade war simmers, dollar slips

EQUITIES REMAIN VOLATILE ON SLOWING CHINESE ECONOMY, UNCERTAIN EARNINGS OUTLOOK

US stocks fell alongside European equities, with technology shares resuming their slide as investors gauged whether China and America can de-escalate their trade dispute before the G20 summit later this month. Treasuries climbed and the dollar retreated.

The S&P 500 Index declined Friday morning after Nvidia Corp. gave a disappointing sales forecast and US Commerce Secretary Wilbur Ross damped hopes of any imminent trade deal with China. The Nasdaq 100 also fell. Some of the pressure on the dollar followed remarks by Federal Reserve Vice-Chairman Richard Clarida, who said yesterday that policy is getting close to neutral and there is some evidence of global slowing. At 10:10 am ET, the Dow Jones Industrial Average was down 16.80 points, or 0.07 per cent, at 25,272.47, the S&P 500 was down 5.84 points, or 0.21 per cent, at 2,724.36 and the Nasdaq Composite was down 41.17 points, or 0.57 per cent, at 7,217.86.

‘Fret about things’

“The market just simply wants to fret about things, and if they wanted to fret about things they have plenty of things to find in the current market environment,” Krishna Memani, chief investment officer at OppenheimerFunds, said. “But if you boil things down, the two key issues come down to rates and trade.”

Equity markets remain volatile as the slowing Chinese economy and uncertain outlook for earnings coincide with investors’ adjusting to the effects of tightening US monetary policy. Political tensions in Europe are also hitting sentiment, while the slump in oil prices earlier last week stoked renewed concerns about the state of global growth as the trade war drags on. Sterling advanced as investors grappled with the UK’s political turmoil, while oil approached $58 a barrel in New York.

The Stoxx Europe 600 headed for its worst week in five, with the day’s early gains turning into losses as tech companies fell and AstraZeneca’s drop weighed on the gauge after a cancer-drug setback. Asian shares were led lower by declines in Japan, even as those in China and Hong Kong climbed.

The pound managed rebound after posting the biggest drop in more than two years on Thursday as several ministers resigned. Prime Minister Theresa May is defying demands to quit as her detractors plot a vote of no confidence over disquiet with her proposed Brexit deal.

Emerging market stocks and currencies edged higher. Gold climbed alongside nickel and aluminium.