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While you were sleeping: Wall St slides on trade war worries

Friday 23rd March 2018

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US Treasuries climbed while Wall Street moved lower after US President Donald Trump said the country plans to impose up to US$60 billion in annual tariffs on imports from China, keeping alive concerns about a global trade war. 

In 1.24pm trading in New York, the Dow Jones Industrial Average dropped 1.3 percent, while the Nasdaq Composite Index retreated 1.2 percent. In 1.08pm trading, the Standard & Poor’s 500 Index shed 1.5 percent.

US Treasuries soared, sending the yield on the 10-year note six basis point lower to 2.83 percent.

“The markets should dislike the possibility of a trade war between United States and other countries,” Stephen Wood, chief market strategist for Russell Investments in New York, told Reuters.

“However, there’s a lot of negotiation taking place there,” Wood noted. “Suddenly we’re seeing smaller numbers and exemptions.”

The Dow declined, led by slides in shares of Caterpillar and those of Boeing, down 3.5 percent and 3.3 percent respectively. Shares of Coca-Cola rose 0.3 percent, the only stock in the Dow to trade higher in early afternoon. 

Shares of Facebook continued their slide, down 2.2 percent as of 1.24pm in New York. The company's chief executive officer Mark Zuckerberg has been called to appear before a House panel.

“The latest revelations regarding Facebook’s use and security of user data raises many serious consumer protection concerns," House Energy and Commerce Committee Chairman Greg Walden and Ranking Member Frank Pallone said in a statement on Thursday. 

"After committee staff received a briefing yesterday from Facebook officials, we felt that many questions were left unanswered," said Walden and Pallone.

Bucking the trend, shares of Conagra climbed, 2.3 percent stronger as of 12.31pm in New York, after the food company posted quarterly profit that exceeded expectations and upgraded its full-year earnings forecast. 

"I continue to be pleased with the progress we are making on improving our fundamentals, particularly on the top line,” Sean Connolly, chief executive officer of Conagra Brands, said in a statement. “Our efforts are paying off, and our businesses are gaining momentum.”

“We continue to invest to drive brand saliency, enhanced distribution, and consumer trial in the face of higher inflation on input and transportation costs, which is pressuring near-term margins,” according to Connolly. 

"Strong underlying trends" allowed the company to raise its fiscal 2018 adjusted earnings per share guidance from its February forecast, he said.  The company now predicts full-year EPS will be between US$2.03 and US$2.05, up from its previous estimate for US$1.95 to US$2.02.

In Europe, the Stoxx 600 Index tumbled 1.7 percent from the previous close. The UK’s FTSE 100 index dropped 1.2 percent, while Germany’s DAX Index gave up 1.4 percent, and
France’s CAC40 Index fell 1.5 percent.

The Bank of England's Monetary Policy Committee held its benchmark interest rate steady on Thursday and underpinned bets that it will raise rates as early as its next meeting meeting in May. 

"As in February, the best collective judgement of the MPC remains that, given the prospect of excess demand over the forecast period, an ongoing tightening of monetary policy over the forecast period will be appropriate," according to the meeting's minutes. 

"All members agree that any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent," the minutes showed. "Seven members thought that the current policy stance remained appropriate.” 

Two members, Ian McCafferty and Michael Saunders, preferred to increase the bank rate by 25 basis points, according to the minutes. 

Investors took note. 

“The message from the Bank of England to borrowers couldn’t really be clearer: get ready for higher rates now,” Ed Monk of fund managers Fidelity International told Reuters. 


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