Global Stocks and Treasury Yields Extend Declines


Global stocks dropped Wednesday as trade tensions and concerns around economic growth continued to dampen risk appetite, sending government bond yields lower.

The yield on 10-year U.S. Treasurys extended its decline to 2.228%, from 2.268% on Tuesday, itslowest level since September 2017. Bond yields and prices move in opposite directions.

U.S. futures pointed to opening declines of 0.7% for both the S&P 500 and the Dow Jones Industrial Average.

In Europe, the Stoxx Europe 600 was down 1.4% in midmorning trade, with the U.K.’s FTSE 100 down 1.5% and Germany’s DAX 1.3% lower.

Asian bourses had a largely gloomy session. Korea’s Kospi closed 1.3% lower, hitting a near five-month closing low, while Japan’s Nikkei fell 1.2%. However, China’s Shanghai Stock Exchange gained 0.2%.

Aside from the lingering trade concerns, investors were wary of a potential end to this year’s bull run for equities, which has led most indexes to post double-digit gains, according to Vincent Juvyns, global market strategist at JP Morgan Asset Management.

“In a month’s time we will record the longest expansion in U.S. history confirming the idea we are entering a late cycle and pushing investors into neutral positions and towards fixed income,” he said.

In commodities, Brent crude oil dropped 1.9% to $67.40 a barrel as data showedU.S. crude stockpiles are growingat their fastest rate since 2016, fueling concerns of oversupply.

Luxembourg-based steelmaker ArcelorMittal was among the biggest losers on the pan-European index, shedding more than 5% after it disclosed plans to cut production in Europe for the second time in a month amid high imports and weak demand.

U.S. stocksclosed lower Tuesdayafter President Trump said Monday that a trade deal with China wasn’t likely to be signed soon and that tariffs could be raised once again.

In the latest twist in the U.S.-China trade spat, Huawei Technologies filed a motion with a Texas court seeking to overturn a law thatlimits federal spending on its productsover national-security concerns. Huawei said U.S. officials have failed to provide sufficient evidence that its products pose a security threat.

crude oil

South Korean dealers work in front of monitors at the KEB Hana Bank in Seoul on Wednesday.


Photo:

jeon heon-kyun/Shutterstock

Meanwhile, an unnamed Chinese official suggested Beijing could be prepared to restrict exports of rare-earth elements to hit back against U.S. tariffs. China is the global leader in production of the materials, which are used in many technology products.

Earlier, the U.S. Treasurydeclined to label China a currency manipulatorin its semiannual report, but said it remained concerned about the nation’s currency practices.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was flat.

Gold gained 0.5% to $1,283.30 a troy ounce.

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