GLOBAL MARKETS-Stocks falter on trade uncertainty; sterling gains


Reuters | Updated: 05-12-2019 22:20 IST | Created: 05-12-2019 22:20 IST
GLOBAL MARKETS-Stocks falter on trade uncertainty; sterling gains

The dollar slid and global equity markets faltered on Thursday as investors dismissed solid economic data and again fretted about the likelihood of a "phase one" trade deal before a new round of U.S. tariffs on Chinese imports begins in 10 days. U.S. Treasury yields rose on reports indicating a resilient economy, including a fall in weekly jobless claims and a decline in the U.S. trade deficit, which suggested trade could contribute to growth in the fourth quarter.

But gold edged higher as mixed messages on the U.S-China trade negotiations stirred uncertainty. Investors have struggled to understand U.S. President Donald Trump's position on trade during his London visit for the NATO summit. Trump said talks with China were going "very well" at one meeting while warning at another that a deal may come only after U.S. elections in November 2020. In addition to the conflicting statements on trade, and with impeachment hearings in Congress, some investors see Trump as perhaps being weakened slightly, said Rick Meckler, a partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

U.S. tariffs on about $156 billion of Chinese imports that are set to begin Dec. 15, and Trump suggesting he would slap tariffs on French imports, have created uncertainty, he said. "If the (China) tariffs go into effect, and if we start new trade wars with Europe, most investors will be looking to reduce their stock exposure," Meckler said. "With that period nearby, investors are reluctant to commit to new purchases."

MSCI's gauge of stocks across the globe gained 0.13%, while the pan-regional STOXX 600 index in Europe lost 0.08%. On Wall Street, the Dow Jones Industrial Average fell 45.75 points, or 0.17%, to 27,604.03. The S&P 500 lost 2.72 points, or 0.09%, to 3,110.04 and the Nasdaq Composite dropped 7.44 points, or 0.09%, to 8,559.23.

U.S. economic reports countered data earlier this week that showed manufacturing activity contracted for a fourth straight month in November, a slowdown in growth in the services sector and a drop in construction spending in October. The dollar fell for a fifth straight session as some traders worried about the week's economic data. A stronger euro and strengthening British pound also hurt the greenback.

Sterling has gained more than 1.5% this week against the dollar as the ruling Conservative Party will likely win a majority in next week's election and end 3-1/2 years of Brexit-related uncertainty by taking Britain out of the European Union. The dollar index fell 0.25%, with the euro up 0.23% to $1.1101. The Japanese yen strengthened 0.19% versus the greenback at 108.68 per dollar.

Sterling was last trading at $1.316, up 0.44% on the day. Investors remained focused on how much damage the trade war is causing around the world and whether the signs of economic stabilization seen in the euro zone will continue.

German industrial orders fell unexpectedly and retail sales in the euro zone fell at their sharpest rate this year in October. Overall, the euro zone economy grew at a modest pace in the third quarter. Germany's blue-chip index, home to major industrial exporters, fell 0.48%.

German 10-year bond yields rose slightly more than 2 basis points to -0.2930 percent. Other core government bond yields also moved between 1 and 2 bps. The benchmark 10-year U.S. Treasury note fell 5/32 in price to yield 1.7965%.

Oil prices rose on expectations the Organization of the Petroleum Exporting Countries and allied oil producers will deepen production cuts in an effort to prop up prices and prevent a glut next year. Brent crude futures rose 39 cents to $63.39 a barrel. U.S. crude rose 0.27% to $58.59 a barrel.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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