Stocks around the world fell on Thursday and the U.S. dollar slipped from a peak as investors flocked to bonds after weak economic data and on worries about a U.S.-China trade war.
Oil futures were lower before an OPEC meeting expected to increase the world’s supply of crude and after a report of a large stockpile draw in the United States.
The U.S. dollar fell from an 11-month high against a basket of major currencies as the Philadelphia Federal Reserve’s gauge of U.S. Mid-Atlantic business activity fell to a near 1-1/2 year low.
U.S. equity investors sold shares on Thursday as they got some specific indications on the potential impact of U.S. President Donald Trump’s trade tariff stand-off with China. German carmaker Daimler cut its earnings forecast late Wednesday saying tariffs on cars sent from the United States to China would hurt Mercedes-Benz car sales.
“Our feeling had been there is some complacency built in to that expectation that it is more ploy than policy. But one of the first cracks in that argument right now is the Daimler announcement,” said Eric Wiegand, senior portfolio manager at U.S. Bank Private Wealth Management in New York.
“Investors are hopeful over time we will get to an agreement and there won’t be a lot of negative consequences along the way but clearly it is still something we are waiting for clarity.”
The Dow Jones Industrial Average fell 196.1 points, or 0.8 per cent, to 24,461.7, the S&P 500 lost 17.56 points, or 0.63 per cent, to 2,749.76 and the Nasdaq Composite dropped 68.56 points, or 0.88 per cent, to 7,712.95.
In Toronto, the S&P/TSX composite index fell 0.52 per cent, or 85.80 points, to 16,335.15.
Energy stocks finished down 2 per cent, including 3.2-per-cent drops for Husky Energy Inc. and Crescent Point Energy Corp. Suncor Energy Inc. was down 1.7 per cent, and Canadian Natural Resources Ltd. fell 1.6 per cent.
Marijuana producers led a 3-per-cent jump in health care stocks. Canopy Growth Corp. rose 5.3 per cent, while Aurora Cannabis Inc. finished up 4.8 per cent.
The pan-European FTSEurofirst 300 index lost 0.93 per cent and MSCI’s gauge of stocks across the globe shed 0.56 per cent.
Emerging market stocks lost 1.04 per cent.
But, Argentina’s MSCI stock index rose 7.6 per cent, putting it on track for its biggest one-day percentage gain since August 2017.
Index provider MSCI said late Wednesday it would reclassify Argentina and Saudi Arabia as emerging market countries next year, broadening the investor base for both countries.
U.S. Treasuries were also impacted by trade concerns. Benchmark 10-year notes last rose 9/32 in price to yield 2.8967 per cent, from 2.928 percent late on Wednesday.
The 30-year bond last rose 15/32 in price to yield 3.0402 per cent, from 3.064 percent late on Wednesday.
The dollar index fell 0.3 per cent, with the euro up 0.4 per cent to $1.1616.
The Japanese yen strengthened 0.42 per cent versus the greenback at 109.90 per dollar.
Global benchmark Brent crude fell more than 2 per cent on Thursday ahead of a meeting of the Organization of the Petroleum Exporting Countries, where producers were expected to boost output to stabilize prices.
OPEC, however, was struggling to agree on raising output, with Saudi Arabia warning of supply shortages and price rallies but Iran holding out against a deal at the group’s meeting on Friday.
Iranian Oil Minister Bijan Zanganeh said he still believes OPEC cannot reach a compromise decision.
“I don’t think we can reach agreement,” Zanganeh told reporters. “We firstly need to discuss and decide about the main issue inside OPEC. OPEC’s decision is so important - after it we should coordinate everything with the Russians.”
Brent crude fell $1.69 to settle at $73.05 a barrel.
U.S. West Texas Intermediate crude for August delivery, the new front month, fell 17 cents to $65.54 a barrel, and was down 68 cents from the July contract’s expiry on Wednesday at $66.22.
Front-month WTI surged to trade as much as 71 cents a barrel over the second month , the biggest premium since October 2014.
The rise came as the July contract expired on Wednesday and as stockpiles in Cushing, Oklahoma declined by 2.3 million barrels in the week to June 19, according to data from market intelligence firm Genscape, traders said. Falling stockpiles could alleviate some concerns that surging U.S. production would outstrip demand.
Reuters