Wall Street extends losses on trade and growth worries

Wall Street extends losses on trade and growth worries

NYSE May23
Traders work on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

NEW YORK: US stocks sank further on Thursday (May 23) as bellicose trade rhetoric persisted between Washington and Beijing.

Investors also shed tech shares, with sentiment dampened by gloomy economic news out of Europe, although equities finished well off session lows.

Meanwhile, the weakness in stocks drove a rally in bonds, pushing down yields and hitting stocks in the financial sector.

The benchmark Dow Jones Industrial Average fell 286.14 points (1.11 per cent) to 25,490.47, its lowest level in 10 days.

Meanwhile, the broader S&P 500 likewise fell 34.03 points (1.19 per cent) to 2,822.24 while the tech-heavy Nasdaq lost 122.56 points (1.58 per cent), settling at 7,628.29.

Chinese officials on Thursday berated Washington for "bullying" Beijing on trade, and called for a show of US "sincerity" before talks could resume to end the escalating trade war.

In another area of friction, US Secretary of State Mike Pompeo in comments on CNBC reaffirmed Washington's hardline position on the blacklisted Chinese telecoms firm Huawei. He called the firm a national security threat and accused the company of lying about its ties to the government in Beijing.

The tech sector has weakened on reports Washington make take action against more Chinese companies.

A rally in bonds saw yields on 10-year Treasurys briefly touch their lowest level since October 2017 at 2.2904 per cent, weighing on shares in the financial sector.

Citigroup fell 1.2 per cent while Bank of America lost 2.6 per cent and JPMorgan Chase fell two percent.

Meanwhile, the IHS Markit flash manufacturing survey fell to a nine-year low.

"For once, investors are not just reacting to tweets and ambient noise from the trade negotiations," Gregori Volokhine, fund manager at Meeshaert Financial Services, told AFP.

"These fresh indicators are the first sign we may be approaching an inflection point in American growth."

Further dampening the mood was gloomy economic and political news out of the EU: a survey showed German business confidence in May hit its lowest level in more than four years, while anticipation that British Prime Minister Theresa May could resign imminently exacerbated Brexit anxieties.

Meanwhile, the International Monetary Fund warned that the US-China trade war threatens to jeopardise the global recovery, and could subtract about a third of a percentage point from GDP growth if Washington carries out a threat to put tariffs on virtually all Chinese imports.

A plunge in benchmark crude prices hit oil shares, with Exxon Mobil losing 2.3 per cent and Chevron falling 2.2 per cent.

Source: AFP/de

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