USA stocks tumble more than 3% on trade, growth worries

Gladys Abbott
December 7, 2018

The New Zealand sharemarket dropped by 1.2 per cent in the opening minutes of trade following on from sharp declines on Wall Street.

"Violent volatility resumed as tumbling bond yields, a flattening yield curve and lingering questions about the G20 US-China trade truce combined to stoke increasing recession fears".

Stocks tumbled Tuesday, sending the Dow Jones Industrial Average down nearly 800 points, as investors anxious that a U.S.

Hong Kong's Hang Seng index fell 1.6 percent to 26,840.74 points and the Shanghai Composite Index lost 0.7 percent to 2,647.55. The Nasdaq composite lost 3.8 percent to 7,158.43. This article is strictly for informational purposes only.

Apple lost 1.7 percent early Tuesday and Bank of America was down 1.3 percent.

Bond prices rose. The yield on the 10-year Treasury fell to 2.95 percent.

"People think there is not "substance" behind Trumps tweets about tariffs so the markets are giving back the gains from before the G20 meeting", Michael Matousek, head trader at U.S. Global Investors, told ABC News.

Trade-sensitive shares were undermined by a failure by Donald Trump's aides to detail the deal that he said he had struck with China, eroding confidence in the agreement, which still doesn't exist on paper and hasn't been confirmed by Beijing.

Yields on two-year and three-year bonds held above the five-year yield for a second day, while the benchmark 10-year yield hit its lowest since mid-September as demand for longer-dated Treasuries rose on bets of an approaching economic slowdown.

A protracted tit-for-tat over import tariffs has dominated the economic landscape since Trump first imposed them in January, with markets in turn rallying and tanking as investor sentiment veered.

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The sell-off came ahead of Wednesday's closure of US stock and bond markets in observance of a national day of mourning for former President George H.W. Bush. "Financial markets are increasingly showing signs of fear of a recession".

The jitters helped drive demand for government bonds. The slide in bond yields, which affect interest rates on mortgages and other consumer loans, weighed on bank stocks.

On sectors, financials and industrials led the slide, declining 4.40 per cent and 4.35 per cent respectively.

The S&P 500 lost 61 points, or 2.2 percent, to 2,729.

Homebuilders fell after luxury homebuilder Toll Brothers issued a cautious assessment of the housing market.

Oil prices rose. OPEC members are expected to agree at a Thursday meeting to cut output in 2019. Benchmark U.S. crude rose 0.6 percent to $53.27 per barrel in NY.

Brent crude, the global standard, added 0.6 percent to close at $62.08 per barrel in London.

CURRENCY: The dollar slipped to 112.80 yen from 113.20 yen. Toll's shares slid 1.6 percent to $32.99. The euro declined to $1.1330 from $1.1343. The British pound fell to $1.2727 from $1.2728 after a top official at the European Union's highest court advised that Britain can unilaterally change its mind about leaving the EU as scheduled on March 29.

The S&P 500 index lost 8 points, or 0.3 percent, to 2,782.

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