Stocks, dollar, treasuries slide on US-Europe trade tensions

Stocks, United States long-dated Treasuries, and the dollar declined sharply on Tuesday as investors reacted to renewed trade tensions between the United States and Europe, according to Reuters.

The move reversed gains seen earlier in the week, reflecting heightened market uncertainty.

Reuters reports that President Donald Trump’s renewed threat to impose tariffs on European imports triggered a repeat of the “Sell America” trade seen after last year’s April tariff announcement, with investors pulling back from US assets.

Wall Street’s key gauge of investor anxiety, the Cboe Volatility Index, rose as much as 1.9 points to an eight-week high of 20.69, Reuters adds. The S&P 500 Index dropped 1.1 per cent to 6,859 points.

“We have certainly seen a meaningful reaction in the risk metrics since Friday; it’s a very significant shift,” Jim Carroll, senior wealth adviser and portfolio manager at Ballast Rock Private Wealth in Charleston, South Carolina, told Reuters. He noted, however, that the move did not represent an extreme panic in markets.

Analysts highlighted that the rise in volatility was partly expected following last week’s monthly equity options expiration. “It’s a standard reaction to geopolitical turmoil: take equity risk off the table, buy gold, buy cash. And that’s kind of what we’re seeing,” Alex Morris, CEO and CIO of F/m Investments, told Reuters.

In currency markets, the safe-haven US dollar fell 0.6 per cent against a basket of peers to a more than two-week low, even as one-month implied volatility for the euro jumped to 6.03 per cent, Reuters reports.

Additionally, a market analyst at online broker Pepperstone in London, Michael Brown, said there was room for further volatility if progress toward resolving the tariff threats remained limited.

Source: https://punchng.com/stocks-dollar-treasuries-slide-on-us-europe-trade-tensions/