European stocks edged lower following drops for U.S. futures and Asian peers as concerns grew over the escalating protectionist standoff between China and the U.S. Oil fell before a key OPEC meeting this week, while the dollar gained and Treasuries were steady.
Energy shares led the slide as the Stoxx Europe 600 Index opened in the red, while S&P 500 Index futures pointed to U.S. equities extending Friday’s decline. In Asia, markets were closed for the holidays in China and Hong Kong -- where they are more sensitive to deepening trade tensions. Japan’s Topix Index fell the most in almost three weeks as the yen edged higher and after a strong earthquake hit Osaka, one of Japan’s industrial heartlands. Oil extended a decline as Saudi Arabia and Russia prepared for a clash with other OPEC members and allies over whether to raise production.
Global trade is back at the top of the agenda, with investors fretting about the intensifying confrontation between the U.S. and China. China swiftly responded after President Donald Trump slapped tariffs on $50 billion of imports, putting an additional 25 per cent levy on $34 billion of U.S. agricultural and auto exports starting July 6.
“Up to now it’s been hypothetical; action has been taken, tariffs are coming and you need to pay very, very careful attention to the impact it’s going to have on your holdings,” Bank of Singapore Chief Investment Officer Johan Jooste told Bloomberg Television. “There are too many unknowns right now to be terribly specific. The thing you do know is risk is higher. The market will take something of a cautionary stance.”
Elsewhere, the euro was under pressure as a migration policy crisis threatens German Chancellor Angela Merkel’s coalition. The pound ticked lower ahead of a parliament debate on the Brexit withdrawal bill.
Terminal users can read more in Bloomberg’s Markets Live blog.
And here are the main market moves:
Stocks
The Stoxx Europe 600 Index decreased 0.2 per cent as of 8:04 a.m. London time. The MSCI World Index of developed countries dipped 0.2 per cent to the lowest in almost two weeks. The MSCI Asia Pacific Index dipped 0.7 per cent to the lowest in almost three weeks. Japan’s Nikkei 225 Stock Average declined 0.8 per cent to the lowest in more than a week. The MSCI Emerging Market Index declined 0.4 per cent to the lowest in more than six months. The U.K.’s FTSE 100 Index rose 0.1 per cent. Futures on the S&P 500 Index dipped 0.4 per cent to the lowest in almost two weeks on the largest decrease in more than two weeks.
Currencies
The Bloomberg Dollar Spot Index climbed 0.1 per cent to the highest in more than 11 months. The euro declined 0.3 per cent to $1.1578. The British pound dipped 0.2 per cent to $1.3245, the weakest in seven months. The Japanese yen gained 0.1 per cent to 110.57 per dollar, the largest rise in more than a week.
Bonds
The yield on 10-year Treasuries decreased less than one basis point to 2.92 per cent, the lowest in more than two weeks. Germany’s 10-year yield was unchanged at 0.40 per cent, the lowest in almost two weeks. Britain’s 10-year yield dipped one basis point to 1.328 per cent, reaching the lowest in almost two weeks on its fifth straight decline.
Commodities
West Texas Intermediate crude decreased 1.5 per cent to $64.07 a barrel, the lowest in 10 weeks. Gold fell 0.1 per cent to $1,278.89 an ounce, the weakest in about six months.
Bloomberg