Stocks Retreat as Treasuries Plunge, Dollar Gains: Markets Wrap – Bloomberg

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U.S. stocks halted a four-day rally with the steepest slide in almost two weeks, while 10-year Treasury yields pushed to levels last seen in 2011 as investors weigh the prospect for higher Federal Reserve rates.

The S&P 500 Index slumped as health-care and tech shares retreated. The Treasury selloff sent note yields to 3.07 percent. Higher rates sap demand for equities that have been on a tear for two weeks. Upbeat retail sales data fueled bets the Fed may raise rates three more times this year, pushing Bloomberg’s dollar index to its 2018 high. Emerging-market equities dropped the most since March. Gold fell below $1,300 an ounce for the first time since December.

Investors grappled with trade, growth, and geopolitical worries as a risk aversion spread across assets. Rising yields, a stronger dollar and sliding stocks are fast becoming a familiar and uncomfortable cocktail for investors. Now violence in the Middle East, the U.S.-China trade spat, uncertainty on Italy’s government and global growth concerns are helping cement the prevailing sentiment.

“Markets don’t know where to look, they don’t know where to focus,” said Samantha Azzarello, global market strategist for JPMorgan ETFs, in an interview at Bloomberg’s New York headquarters. “It’s odd — rates are going up and we’re late cycle, and then volatility is back after volatility being so low, almost painfully low. And then I think clouds of uncertainty coming from Washington and geopolitics lays on top of all of it.”

European equities were mixed but benchmarks fell in South Korea and Australia earlier, and in Hong Kong after data signaled investment slowing in China. Shanghai shares bucked the declines as the same numbers showed economic momentum broadly holding The euro slid following disappointing German growth data. Despite the sour mood, established safe-haven assets failed to catch a bid. Gold and the yen dropped, and the Swiss franc weakened.

Elsewhere, the Turkish lira hit a new low, plunging after President Recep Tayyip Erdogan said he intends to tighten his grip on the economy and take more responsibility for monetary policy if he wins an election next month. Emerging-market stocks slumped.

Terminal users can read more in our markets live blog.

These are some key events to watch this week:

  • China plans to send Vice Premier Liu He to Washington for more trade talks.
  • European Union Chief Brexit negotiator Michel Barnier briefs European affairs ministers on the status of talks with the U.K.
  • U.K. Prime Minister Theresa May meets with her Brexit cabinet Tuesday to discuss plans for a post-withdrawal customs union.
  • U.S. industrial production numbers are due this week.

These are the main moves in markets:

Stocks

  • The S&P 500 fell 0.9 percent at 3:20 p.m. in New York.
  • The Nasdaq 100 Index lost 1.4 percent and small caps were little changed.
  • The Stoxx Europe 600 Index added 0.1 percent.
  • The MSCI All-Country World Index declined 1 percent, the first retreat in a week.
  • The MSCI Emerging Market Index declined 1.7 percent, the first retreat in more than a week and the biggest tumble in almost seven weeks.
  • The MSCI Asia Pacific Index sank 1.1 percent, the largest decrease in almost seven weeks.

Currencies

  • The Bloomberg Dollar Spot Index climbed 0.6 percent to the highest in almost 20 weeks.
  • The euro declined 0.7 percent to $1.1846.
  • The British pound dipped 0.3 percent to $1.3510.
  • The Japanese yen dipped 0.7 percent to 110.375 per dollar, the weakest in 16 weeks.

Bonds

  • The yield on 10-year Treasuries jumped seven basis points to 3.07 percent, the highest in about seven years.
  • The two-year rate climbed three basis points to 2.576 percent, the highest since 2008.
  • Germany’s 10-year yield increased three basis points to 0.64 percent, the highest in more than two months.

Commodities

  • West Texas Intermediate crude rose to settle at $71.31 a barrel.
  • Copper futures decreased 1.1 percent to $3.06 a pound.
  • Gold futures fell 2 percent to $1,291.60 an ounce.

— With assistance by Samuel Potter, and Sophie Caronello