Global markets: Stocks extend decline after Kudlow trade remarks
Apple’s poor forecast hit tech-heavy indexes, and Treasuries fell after US hiring rebounded more than forecast in October
Stocks deepened declines as hopes of easing trade tensions with China faded after remarks by presidential adviser Larry Kudlow. Apple’s poor forecast hit tech-heavy indexes, and Treasuries fell after US hiring rebounded more than forecast in October.
The S&P 500 dropped for the first time in four days, while the Nasdaq 100 slid more than 2 percent as Apple retreated after underwhelming sales forecasts. Rates-sensitive utilities and real estate stocks also pulled down indexes. Industrials turned lower after Kudlow said he’s “ not as optimistic” as he once was on the prospects for a China trade deal.
The 10-year Treasury yield hit 3.19% and the dollar rose as investors speculated the Federal Reserve won’t be deterred from its rate-hike path after a jobs report that indicated annual wage gains surpassed 3 percent for the first time since 2009. West Texas crude traded around $63 a barrel.
“Trade negotiations will continue to be front and center,” Chad Morganlander, senior portfolio manager at Washington Crossing Advisors, said in an interview. “At the same time, the jobs numbers were quite robust. This will push the Fed to continue raising rates.”
Doubts remain on the capacity of earnings to deliver. Apple’s disappointing forecast for the key holiday period suggested weaker-than-expected demand for the company’s pricier new iPhones. Next up is mid-term elections next week. Analysts also doubted the Trump administration’s ability to end the trade tensions any time soon.
Talks between the US and China may not be straightforward, with intellectual property theft still a stumbling block. A Chinese state-owned company was charged Thursday with conspiring to steal trade secrets from American chipmaker Micron Technology Inc. as the Justice Department steps up actions against the Asian nation in cases of suspected economic espionage.
Elsewhere, the Stoxx Europe 600 Index headed for its best week in two years and equities from Hong Kong to Tokyo surged, taking gains on the MSCI Asia Pacific Index to 5 percent for the week. Emerging-market shares jumped the most since March 2016, while currencies from South Korea to Australia joined the rally. The euro fell on reports that the ECB was considering new dovish measures.
Meanwhile, WTI declined as fears over a supply disruption eased after the U.S. was said to agree on giving waivers to eight nations to continue importing Iranian crude. Bloomberg’s gauge of industrial metals extended a rebound from a 15-month low as copper, zinc and nickel led gains in other raw materials.
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