USA stocks claw back lost ground

USA stocks claw back lost ground

US equities suffered their worst day of the year on Monday as investors expected that President Donald Trump's threatened new tariffs on Chinese imports will worsen trade prospects and lead to a global economic slowdown, analysts said.

Meanwhile Beijing appeared to be prepared to tolerate more currency weakness that could further distress the trade conflict with Washington after China allowed the yuan breach the key 7-per-dollar level for the first time in more than a decade today. -China trade relations, after Beijing confirmed an earlier report from Bloomberg news that it is suspending agricultural product purchases in response to new American tariffs.

Trump stunned financial markets last week by threatening to impose 10% tariffs on the remaining $300 billion of Chinese imports, abruptly abandoning a brief ceasefire.

USA stocks fell on Wednesday, as investors reeling from rising trade tensions fled riskier assets for perceived safer havens and the bond markets signalled a higher risk of recession.

The S&P 500 was down 28.98 points, or one percent overall - while the tech-heavy Nasdaq Composite Index was down slightly. It was down as much as 3.7% in the afternoon.


At 11:06 a.m. ET, the Dow Jones Industrial Average was up 88.54 points, or 0.34 per cent, at 25,806.28, the S&P 500 was up 13.31 points, or 0.47 per cent, at 2,858.05. The central banks of India, New Zealand and Thailand all dropped rates on Wednesday - and all of them acted more emphatically than anticipated.

"We're getting a nice move here, but if you look at what the tone of the market might be for the next few days it still could be under some pressure", said Jeff Kravetz, regional investment director for U.S. Bank Wealth Management. "We started a fight, and when the opponent punches back, I'm not sure why we're surprised". Hong Kong's Hang Seng Index finished at 25976.24, down 175.08 or -0.67% and South Korea's KOSPI closed at 1917.50, down 29.48 or -1.51%.

10-year US T-bond yield erases more than 7% as flight-to-safety intensifies.

Elsewhere, the yield on the 10-year United States treasury note was down 6.8 basis points - 100 basis points equals a full percentage point - at 1.639% while the 10-year gilt's yield fell 4.3 basis points to 0.473%.

The yield on the 10-year Treasury dropped to its lowest level in almost three years, down to 1.67 per cent from 1.74 per cent late Tuesday, and it's been sliced almost in half in just nine months. Both are unusually large moves.


Traders on the floor of the New York Stock Exchange monitor the recovering markets. Threats of expanded tariffs are also creating uncertainty in corporate boardrooms, spurring concern there will be a pullback in capital outlays and a drop in company earnings with central banks lacking the firepower to buoy growth.

Technology companies, which would stand to suffer in a protracted trade war, took the biggest losses. It dropped $1.92 the previous session to $59.81.

At the same time, the onshore Chinese yuan changed hands at 7.0304 against the dollar on Monday, while the offshore yuan traded at 7.0807 against the greenback. It fell $1.06 to $53.63 a barrel on Tuesday. Profit for companies in the S&P 500 is now expected to contract by roughly 1 percent.

The US dollar was steady, while the yen gained and gold rallied toward $1,500 an ounce.

The Standard & Poor's 500 index dropped 3% to 2,844.74.


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