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Trump Trade Jabs Sink Stocks; Jobs Miss No Help: Markets Wrap

Traders work on the floor of the Tokyo Stock Exchange in Tokyo, Japan.

(bloomberg)

(Bloomberg) -- President Donald Trump rattled global financial markets with fresh trade threats against China, halting a three-day rally in U.S. shares and driving demand for Treasuries. Weaker-than-expected jobs data did little to alter investors positions.

Futures on the S&P 500 fell after Trump ordered his administration to consider tariffs on an additional $100 billion worth of Chinese imports. Contracts remained lower after data showed U.S. hiring cooled by more than forecast in March. The 10-year Treasury yield held near 2.81 percent on the report.

The offshore yuan slid as China responded saying it would counter protectionism “to the end, and at any cost.” Gold and the Japanese yen handed back earlier gains, while the dollar headed for a second weekly advance.

Trump’s latest move upended optimism that the U.S. and China will be able to negotiate a solution to avoid tariff proposals. After a volatile week, traders will be closely scrutinizing a speech from Federal Reserve Chairman Jerome Powell on Friday for clues on how the trade tensions are affecting monetary policy. The slowdown in hiring follows strong growth in 2017.

“With higher volatility here to stay and continued high political uncertainty, investors need to be discerning regarding their exposure,” said Salman Ahmed, Chief Investment Strategist at Lombard Odier Investment Managers. “The increased risk of a trade war is likely to continue to weigh on performance until the uncertainty dissipates.”

Elsewhere, Bitcoin headed for the lowest close since November and oil fell.

Terminal users can read our markets live blog here.

Here are some key events for the remainder of this week:

  • On Friday, America publishes non-farm payrolls and an employment report; the jobless rate was forecast to have fallen in March after holding at 4.1 percent for five straight months.
  • Powell will deliver a speech on the economic outlook during a visit to Chicago at 6:30pm London time, San Francisco Fed. president John Williams will speak later.

And these are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index sank 0.5 percent as of 8:34 a.m. New York time, the biggest decrease in more than a week.
  • The MSCI All-Country World Index fell 0.1 percent.
  • Futures on the S&P 500 Index lost 1 percent.
  • Germany’s DAX Index dipped 0.5 percent.
  • The U.K.’s FTSE 100 Index decreased 0.3 percent.

Currencies

  • The Bloomberg Dollar Spot Index increased 0.1 percent to the highest in more than two weeks.
  • The euro decreased less than 0.05 percent to $1.2235, the weakest in more than five weeks.
  • The British pound fell less than 0.05 percent to $1.4002, the weakest in more than two weeks.
  • South Africa’s rand fell 0.8 percent to 12.0812 per dollar, the weakest in eight weeks.

Bonds

  • The yield on 10-year Treasuries declined one basis point to 2.82 percent, the largest fall in more than a week.
  • Britain’s 10-year yield declined two basis points to 1.418 percent, the biggest drop in more than a week.
  • Germany’s 10-year yield dipped one basis point to 0.52 percent, the largest dip in more than a week.

Commodities

  • The Bloomberg Commodity Index decreased 0.6 percent.
  • West Texas Intermediate crude dipped 0.8 percent to $63.00 a barrel, the lowest in more than two weeks.
  • LME copper declined 1 percent to $6,745.00 per metric ton.
  • Gold fell 0.3 percent to $1,322.71 an ounce, the weakest in more than two weeks.

--With assistance from Cormac Mullen and Adam Haigh

To contact the reporters on this story: Eddie van der Walt in London at evanderwalt@bloomberg.net, Jeremy Herron in New York at jherron8@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Natasha Doff

©2018 Bloomberg L.P.

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