• U.S. stock futures slipped
Stocks dropped around the world as protests in Hong Kong, a political shake-up in Argentina and global trade tensions continued to fuel investors’ concerns about the global economy.
Futures tied to the Dow Jones Industrial Average slipped 0.4% Tuesday, after asharp decline in the index Mondayextended a recent bout of stock volatility. A selloff in Hong Kong stocks accelerated, with the Hang Seng Index falling 2.1%amid continued unrest.
In Europe, the benchmark Europe Stoxx 600 index declined 0.7%, led lower by banks and auto companies. German consumer-goods company Henkel was among the worst performers, dropping 7% after cutting its full-year growth forecast.
The yield on the German 10-year bund fell to minus 0.617%, a record intraday low, after a key survey of business expectations showed a sharp drop in sentiment. Bond yields fall as prices rise.
Political turmoil in Italy, where lawmakers are looking to schedule a date for a no-confidence vote in Prime Minister Giuseppe Conte’s government, added to worsening sentiment across Europe, driving Italian government 10-year bond yields down to 1.677%.
“Yields are likely to stay low for a while,” said Oliver Jones, market economist at Capital Economics. While short-term factors such as the protests and political shifts are clearly having an impact on investor sentiment, the long-term outlook determining bond prices is “a slowing global economy and a trade war which continues to run,” he said.
This week’s selloff in Hong Kong stocks meant the Hang Seng Index—which has lost 11% since the beginning of July, when the protests turned more violent—has joined Korea’s Kospi as the second major global benchmark in negative territory this year.
shares fell another 3% after declining 4.9% on Monday, their steepest drop in three years. They slid after the Hong Kong airline threatened to fire staff for supporting the protests. In India, shares in
Gold, a traditional haven commodity, rose 1.5%, while the yields on U.S. 10-year Treasurys dipped to as low as 1.62% from Monday’s 1.64%.
Investors have been caught out by the worsening trade tensions, said Fahad Kamal, chief market strategist at Kleinwort Hambros,
’s U.K. private bank.
“The market sentiment a few months ago was for trade-war resolution by the end of the year,” he said. “Now they face a downside surprise.”
Later in the day, investors will pay close attention to the Labor Department’s July consumer-price index for signs of strengthening inflation, to gauge what impact it may have on the Federal Reserve’s interest-rate decisions. In the previous month,core prices rose 0.1%.
Weakening price pressure was one of the factors behind the Fed’s decision tocut its benchmark rate last month.
The Argentine peso, whichfell more than 30% briefly Mondayamid political upheaval in the Latin American country, was largely flat against the U.S. dollar.
Write toSteven Russolillo at[email protected]
Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8