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Stocks Decline on Turmoil in Hong Kong, Argentina: Markets Wrap

  • Europe shares, U.S. futures slip as Hong Kong benchmark slumps
  •  Dollar edges up with Treasuries as gold extends recent gains

WT24 Desk

European stocks and U.S. equity futures declined on Tuesday and Asian shares slumped as turmoil in Hong Kong and Argentina spooked investors already on edge over the trade war. The dollar edged higher as gold and silver rallied, Bloomberg reports.

The Stoxx Europe 600 Index fell for a third day, dragged down by industrial and automaker shares, while contracts on the three major U.S. equity indexes fluctuated before turning lower. In Asia, a regional benchmark headed for its biggest drop in a week. Hong Kong stocks were the worst hit as anti-government protesters again targeted the airport and the city’s leader warned it risked sliding into an “abyss.” Japan’s Topix gauge erased this year’s gain as it reopened following a long weekend.

Treasuries nudged higher alongside the yen, while gold climbed toward $1,530 an ounce. China’s 10-year bond yield slipped briefly to 3% for the first time since 2016 as data showed credit demand in the country dropping.

The latest sell-off in risk assets is adding to already skittish sentiment across markets during the low-volume month of August. With the U.S. and China offering no respite to their trade war and a slew of data pointing to slowing global growth, traders will look to this week’s euro-zone GDP figures and industrial production reports from both China and America for further clues to the outlook.

“You’ve got the problem of the protectionist push leading to this downdraft in the economic data, leading to stretching the cycle,” said Ben Powell, chief Asia-Pacific strategist at BlackRock Investment Institute. “A combination of those two themes is creating quite an unusual and challenging macro investment environment that we all have to wrestle with.”

Signs of the trade war’s impact are growing. Singapore’s government cut its forecast for economic growth this year to almost zero. In Europe, Henkel missed quarterly profit estimates, which the maker of detergents blamed on a competitive retail environment and the trade conflict’s impact on its adhesives unit.

Elsewhere, the Swiss franc came off its strongest level versus the euro since 2017, as more economists predict the central bank will cut interest rates. And Argentina’s peso sank on Monday and the nation’s equities crashed after voters turned on the president in a primary vote. Oil was steady.

Here are some key events coming up:

  • Companies releasing results include China’s JD.com, Tencent and Alibaba; Cisco, Walmart and Nvidia of the U.S.; the U.K.’s Prudential; Australia’s Telstra; Europe’s Swisscom and brewer Carlsberg.
  • The U.S. consumer price index, out Tuesday, probably picked up to a 1.7% annual pace in July, according to economist estimates. Core prices, which exclude food and energy, are seen rising 2.1%.
  • Wednesday brings data on China retail sales, industrial production and the jobless rate.
  • Thursday sees the release of U.S. jobless claims, industrial production and retail sales data.

These are the main moves in markets:

Stocks

  • Futures on the S&P 500 Index fell 0.4% as of 10:36 a.m. London time.
  • The Stoxx Europe 600 Index decreased 0.7%.
  • The MSCI Asia Pacific Index dipped 1.2%.
  • Hong Kong’s Hang Seng Index tumbled 2.1%.

Currencies

  • The Bloomberg Dollar Spot Index advanced 0.1%.
  • The onshore yuan sank 0.1%.
  • The euro dipped 0.1% to $1.1201.
  • The Japanese yen strengthened 0.1% to 105.17 per dollar.
  • The British pound fell 0.1% to $1.2068.

Bonds

  • The yield on 10-year Treasuries decreased two basis points to 1.63%.
  • Britain’s 10-year yield decreased two basis points to 0.474%.
  • Germany’s 10-year yield dipped two basis points to -0.61%.
  • Italy’s 10-year yield declined three basis points to 1.677%.

Commodities

  • Gold climbed 1.1% to $1,527.13 an ounce.
  • Silver increased 2.1% to $17.43 per ounce.
  • West Texas Intermediate crude fell 0.1% to $54.88 a barrel.

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