Stocks Fall as China Trade Probe Adds to War Gloom: Markets Wrap
(Bloomberg) — US stocks headed for their longest streak of weekly losses since 2022 as traders grew more nervous about a protracted war in the Middle East, while China upped the ante in its trade dispute with the US. Bonds fell globally.
S&P 500 futures dropped 0.3%, with the benchmark on course for a fifth weekly decline. Brent gained 2.3% to more than $110 a barrel. Two-year Treasury yields climbed three basis points to 4.01%. The dollar and gold edged higher.
Friday’s moves came after President Donald Trump pushed back his deadline for Iran to strike a deal with the US as the two sides remain far apart after nearly a month of attacks. The conflict has inflicted damage to energy infrastructure across the Gulf and effectively shut a vital artery for oil and gas shipments.
Traders fear a broadening impact on energy supplies and oil prices, stoking fears of an inflationary spiral that could force central banks to tighten monetary policy. Also weighing on sentiment was China’s move to open a trade probe into the US ahead of an expected summit between Trump and President Xi Jinping.
“After several glimmers of hope, fueled by comments from President Trump, which were quickly dashed, the market is becoming more demanding in terms of rhetoric,” said Amélie Derambure, senior multi-asset portfolio manager at Amundi. “The TACO trade is more difficult to do because a return to square one is not possible from here.”
European stocks fell 1.1%, with the Stoxx 600 on track for its worst month since the onset of the pandemic. Yields on UK, German and French government debt rose four basis points or more across the curve. Asian stocks extended March’s losses to more than 10%.
Sentiment remained fragile as Iran and Israel exchanged missile fire and Tehran targeted several Gulf states on Friday morning. The Wall Street Journal reported the Pentagon is looking at sending up to 10,000 additional ground troops to the Middle East.
“Trump is unpredictable, so one doesn’t know whether he’s gaining time to send troops to invade the Strait of Hormuz or to negotiate further,” said Nicolas Domont, a fund manager at Optigestion in Paris. “The war could stop anytime and things could return to normal within a few months but one could also end up with oil at $200 in six months.”
What Bloomberg’s Strategists Say:
“Assets were already lagging the earlier move in commodities. This suggests there is room for further adjustment to catch up with existing price increases. As energy prices continue to rise, the outlook for both bonds and equities can only deteriorate further.”
— Skylar Montgomery Koning, macro strategist. Click here for the analysis.
Meanwhile, China’s investigations into US trade practices signaled the country’s retaliation against similar probes by the Trump administration. The move is a direct mirror of steps Trump took to revive his tariff agenda after the Supreme Court last month struck down some of his duties.
“China has learnt that a confrontational approach on trade produces the most favorable outcome in negotiations,” said Wolf von Rotberg, equity strategist at Bank J Safra Sarasin. “The reciprocal action China has launched should be seen as a move to stake out its territory ahead of the Trump-Xi meeting.”
Corporate News:
Oaktree Capital Management is meeting all redemption requests it received for a $7.7 billion private credit fund aimed at retail investors, siding with managers that have decided against enforcing a cap on withdrawals. Novartis AG has agreed to acquire biotech firm Excellergy Inc. for as much as $2 billion, in a deal that will strengthen its portfolio of treatments for food allergies and other immunology conditions. Apple Inc. plans to open Siri to outside artificial intelligence assistants, a major move aimed at bolstering the iPhone as an AI platform. Anthropic PBC is considering going public as soon as in October, according to people familiar with the matter. Pernod Ricard SA and Brown-Forman Corp., the owner of Jack Daniel’s whiskey, are discussing a merger as the alcoholic drink companies look at ways to consolidate amid an industry downturn. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.3% as of 6:45 a.m. New York time Nasdaq 100 futures fell 0.5% Futures on the Dow Jones Industrial Average fell 0.2% The Stoxx Europe 600 fell 1% The MSCI World Index fell 0.2% Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.1% to $1.1514 The British pound fell 0.2% to $1.3302 The Japanese yen was little changed at 159.94 per dollar Cryptocurrencies
Bitcoin fell 3.1% to $66,829.41 Ether fell 2.7% to $2,007.55 Bonds
The yield on 10-year Treasuries advanced five basis points to 4.46% Germany’s 10-year yield advanced five basis points to 3.12% Britain’s 10-year yield advanced 11 basis points to 5.09% Commodities
West Texas Intermediate crude rose 2.3% to $96.67 a barrel Spot gold rose 0.8% to $4,411.78 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Nick Heubeck.
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