EXCHANGED FINISH OF NEW YORK STOCK
(Reuters) – The New York Stock Exchange closed in sharp decline on Thursday, fearing that the trade war between the United States and China would curb economic growth.
The Dow Jones produced 286.14 points, or 1.11% at 25.490,47 and the broader S & P-500 lost 34.03 points or 1.19% to 2.822,24.
The Nasdaq Composite fell 122.56 points (1.58%) to 7,628.28 after losing more than 2% in session.
The intensification of the commercial dispute, with the reciprocal introduction of tariffs and Washington's decision last Friday to put the Chinese group Huawei on a blacklist, brought the markets back into a downward spiral and the ; S & P gave way in May. its worst monthly performance since its correction in December.
The verbal challenge continued on Thursday with the Chinese Ministry of Commerce, according to which the United States had to correct its mistakes if they wanted to resume negotiations.
Shortly before closing, President Donald Trump still hoped to reach an agreement, adding that he would do if it were not the case.
Words have been added to the economic indicators that show that trade war is beginning to have an impact on the US economy. According to a New York Fed study, new customs duties of 25% on $ 200 billion of Chinese imports will incur an additional cost of $ 831 per year for the average American family.
"Investors realize that an agreement will be more difficult to obtain and this is really detrimental to the economic environment," says Luke Tilley, Chief Economist at the Wilmington Trust in Wilmington, Delaware, calling the session "a classic move" . risk aversion. "
The main indices have reduced their losses at the end of the session in the hope that the deterioration of the situation will lead the Federal Reserve to lower its key rates. According to the FedWatch barometer of the CME group, the probability that rates will remain at the current level next October is only 36.2% compared to 50.8% on Wednesday.
Volumes increased with 7.61 billion shares traded, compared to an average of 6.99 billion dollars in the previous 20 sessions.
Nine of the 11 main S & P sector indices closed in the red, with utilities (+ 0.82%) and real estate (+ 0.51%) which recorded good results thanks to their defensive profile.
A sign of the times, the real estate sector has become part of technology as the best performing sector since the beginning of the year, with a gain of around 17.8% for both, compared to an increase of 12 , 6% for the S & P-500 index.
The largest sector decline was in energy, which fell by 3.13% in the wake of oil prices. Technology, industry and materials, sensitive to trade, fell by 1.73%, 1.59% and 1.53% respectively.
The financials were not left behind, with a return of 1.49% with the relaxation of long rates.
At individual stocks, the Best Buy distributor dropped 4.84% despite better than expected quarterly results, as CEO Hubert Joly warned that the latest wave of rates promised by the administration Trump "will lead to price increases and penalize the American consumer".
The largest drop in the S&P 500 was for data storage specialist NetApp, which was sanctioned by a decline of 8.11% after a publication below expectations.
On the contrary, the better than expected results allowed the L Brands retailer (12.84%) to record the best performance of the index, while Target added 2.37% to 7.75% the day before after the its publication
INDICATORS OF THE DAY
The growth of productive activity practically came to a halt in May according to the IHS Markit Purchasing Managers index, which is usually followed badly in the United States, but was discussed on Thursday in the particular context of trade war. In its flash version, this index came out at 50.6, the minimum since September 2009 and close to the point of 50 that separates growth and contraction. Economists expected an average of 52.5 after 52.6 in April.
Sales of new homes in April, down 6.9%, also fell more than expected.
These indicators have overshadowed an unexpected drop in unemployment claims last week, at 211,000, which confirms that the labor market remains strong.
THE SESSION IN EUROPE
The European stock markets were already significantly reduced, due to the commercial tensions and disappointing PMI indices in the euro area, combined with a stronger than expected decline in the business climate in Germany.
In Paris, the CAC 40 fell by 1.82% to 5,281.37 points. The German Dax lost 1.78%, the British Footsie 1.41% and the Italian FTMib 2.12%.
The EuroStoxx 50 index fell by 1.76%, the FTSEurofirst 300 of the 1.42% and the Stoxx 600 of the 1.42%. (.EUFR)
Risk aversion led to massive purchases of Treasury bonds and their corollary, lower returns.
The 10-year bond yield fell to 2.2292%, the lowest level since October 2017, before ending around 2.293% against 2.393% on Wednesday evening.
The two-year period, the most sensitive to key rates, fell to 2.11%, a minimum of 15 months, before returning to 2.109% against 2.241% on Wednesday.
The yield curve between the 3-month warrants and the 10-year card and the 2 to 5-year note have reversed, raising fears of a recession in the United States – and hopes for a rate decline.
The yield on 30-year bonds fell to a minimum of 16 months at 2.731%.
Like Treasuries, the dollar benefited from its status as a safe haven and the index measuring its value against a basket of reference currencies peaked from May 2017 to 98.371.
However, concerns about expectations of a re-acceleration of Fed rate-cutting growth declined at the end of the session (-0.2% to 97.859).
The euro / dollar, weakened by the disappointing indicators in the euro zone and the prospect of a populist vote in the European elections that could weaken the single currency, touched a one-month low of 1.109 before returning to green at the end of the session (+ 0.28% to 1.1333) with the fall in the dollar.
The uncertainty about Brexit and the news about the departure of British Prime Minister Theresa May pushed the pound down for a fourteenth consecutive session against the euro, not having seen the single currency in 20 years.
Oil prices ended sharply lower on the Nymex, also taken by fears of a slowdown in the global economy.
The July contract on US light crude (West Texas Intermediate, WTI) fell by $ 3.51, or 5.71%, to $ 57.91 a barrel, after falling to 57.33, its largest low since March 13th. North Sea Brent sold $ 3.23 or 4.55% to $ 67.76 after a low of 67.02.
(with April Joyner in New York and Shreyashi Sanyal in Bangalore, Véronique Tison for the French service)
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