Stocks fall as Trump's China tariff threat dampens risk appetite
A sharp fall on Wall Street dragged a global stocks index down on Friday on concerns that the world's two largest economies could resume a trade war, with many financial markets closed for a holiday.
The euro rose and the US dollar fell against most of its peers, and the pound succumbed to weak economic data. Crude oil prices traded in and out of negative territory.
London, Tokyo and New York markets were open on Friday, and stocks were pressured lower in reaction to US president Donald Trump's threat to increase sanctions on China in retaliation for its handling of the novel coronavirus outbreak.
"A rise in tension between China and the US certainly could have a negative impact on the US economy and business confidence, which is already hurt from the shutdowns," said Carin Pai, director of equity management at Fiduciary Trust International in New York.
Trump offered no evidence after claiming on Thursday he had seen proof that the virus originated in a Chinese laboratory. The pandemic, which has cost more than 60,000 lives in the United States alone, sparked an economic contraction and threatens Trump's chances of re-election in November.
"A rise in tension between China and the US certainly could have a negative impact on the US economy and business confidence, which is already hurt from the shutdowns," said Carin Pai, director of equity management at Fiduciary Trust International in New York.
The Dow Jones Industrial Average fell 568.36 points, or 2.33 per cent, to 23,777.36, the S&P 500 lost 79.71 points, or 2.74 per cent, to 2,832.72 and the Nasdaq Composite dropped 275.52 points, or 3.1 per cent, to 8,614.03.
The benchmark London stocks index lost 2.34 per cent and MSCI's gauge of stocks across the globe shed 2.21 per cent. Japan's Nikkei lost 2.84 per cent.
US Treasury yields were little changed after data showed manufacturing activity in the world's largest economy plunged to an 11-year low in April.
In a sign of the challenge facing global policymakers, the European Central Bank said on Friday the euro zone economy is likely to rebound in the second half of this year but may fail to return to last year's level until as late as 2022 due to the pandemic.
Benchmark 10-year notes last fell 5/32 in price to yield 0.6386 per cent, from 0.625 per cent late on Thursday.
In a sign of the challenge facing global policymakers, the European Central Bank said on Friday the euro zone economy is likely to rebound in the second half of this year but may fail to return to last year's level until as late as 2022 due to the pandemic.
However, the euro rose the most in nearly six weeks.
The dollar index fell 0.068 per cent, with the euro up 0.22 per cent to $1.0979.
The Japanese yen strengthened 0.35 per cent versus the greenback at 106.83 per dollar, while sterling was last trading at $1.2492, down 0.79 per cent on the day.
The offshore Chinese yuan hit its weakest in a month versus the US dollar after Trump's tariff threats.
Oil prices wobbled again as weak demand due to the virus and excess supply outweighed a record output cut by OPEC and its allies.
US crude recently rose 6.9 per cent to $20.14 per barrel and Brent was at $26.77, up 1.1 per cent on the day.
Spot gold added 1.2 per cent to $1,699.33 an ounce.