Wall Street slides on geopolitical, recession fears

US futures decline as Hong Kong unrest sours mood

US futures decline as Hong Kong unrest sours mood

Britain's 10-year yield rose one basis point to 0.495%.

Futures down: Dow 0.74%, S&P 0.74%, Nasdaq 0.80%.

Investors seeking safety in perceived safe havens bolstered the Japanese yen, gold prices and US government bond prices.

Flags of US and China are displayed at American International Chamber of Commerce (AICC)'s booth during China International Fair for Trade in Services in Beijing, China, May 28, 2019. The risk is that the tit-for-tat tariff battle between the world's two largest economies could turn the economic slowdown into a recession. Goldman Sachs said last week's maneuvers suggested the fight "appears to have escalated into a full-blown conflict".

China-sensitive stocks including Caterpillar, Deere and Boeing all declined more than 1%.

Banks were also feeling trade heat with Bank of America and Goldman Sachs both losing more than 2%.

Goldman Sachs Group Inc said on Sunday that its economists see recessionary risks increasing as the trade war between the world's two largest economies drags on, and no longer expect a resolution before the 2020 US presidential election. Beijing allowed its currency to sharply lose value, raising fears of a currency war.

U.S. equity futures reversed an advance on Monday alongside European stocks as mounting unrest in Hong Kong weighed on investor sentiment.

This morning has been relatively quiet except for events in Hong Kong, where the airport authority canceled all flights after protesters flooded the airport.

The iShares MSCI Hong Kong ETF tumbled 3% on Monday, leaving the fund down 13% so far this quarter. The peso plunged more than 15% against the United States dollar on worries that populists will replace Argentina's business-friendly government. In trade news, investors are expecting the trade talks to continue in Washington next month.

Sysco was up 3.2% after beating Wall Street expectations for quarterly revenues, while Barrick Gold was ahead 1.85% on the back of some upbeat guidance. Gains for the safest government bonds point to a lot of lingering caution. The declines come as the 10-year Treasury note slipped to a near 52-week low at around 1.65%. The spread between 2-year and 10-year Treasury yields narrowed to only 6 basis points on Monday, near its lowest level since 2007.

Lower yields translated into a dismal session for large banks, which typically garner lower profits when interest rates fall. The spectre of the August 5 bloodbath when major US stock averages suffered their worst day of the year thus far still lingers. The S&P 500 is now sitting about 5% below the all-time highs set in late July prior to the outbreak in trade tensions.

Morgan Stanley's chief strategist rattled investors when he said the cyclical bear is still alive and kicking.

Financial markets have performed poorly even after the Federal Reserve granted investors' wishes by lowering interest rates in late July, the first rate cut in almost 11 years.

Notícias recomendadas

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.