Global stocks weighed down by concerns over trade, Italian budget

By David Randall NEW YORK (Reuters) - Mixed trading in benchmark U.S. indexes was not enough to turn global stock markets higher Tuesday as concerns about Italy's budget and the fate of U.S.-China trade talks continued to weigh on investor sentiment, pushing safe haven U.S.

Reuters May 29, 2019 01:05:21 IST
Global stocks weighed down by concerns over trade, Italian budget

Global stocks weighed down by concerns over trade Italian budget

By David Randall

NEW YORK (Reuters) - Mixed trading in benchmark U.S. indexes was not enough to turn global stock markets higher Tuesday as concerns about Italy's budget and the fate of U.S.-China trade talks continued to weigh on investor sentiment, pushing safe haven U.S. Treasury yields to their lowest levels since October 2017.

Markets had been cheered by limited gains for nationalists in the EU elections, though wins for euroskeptic parties in Italy, France, Poland and would-be ex-member Britain, as well as snap elections in Greece and political turmoil in Austria, curbed risk appetite.

Italy's dispute with the European Commission, however, emerged to dominate European trading as markets opened. The commission could fine Italy 3 billion euros for accumulating debt and deficits that break EU rules, Italian Deputy Prime Minister Matteo Salvini said on Tuesday.

"It reopens the whole agenda of whether Salvini wants to be part of the euro or not," said Colin Harte, portfolio manager and strategist at BNP Paribas Asset Management.

"The danger is that the (dispute between Salvini and the EU) turns out to be more aggressive on both sides, then you will see people switch out of positions," Harte said.

In the United States, the Dow Jones Industrial Average fell 22.18 points, or 0.09%, to 25,563.51, the S&P 500 lost 2.66 points, or 0.09%, to 2,823.4 and the Nasdaq Composite added 17.51 points, or 0.23%, to 7,654.51.

The pan-European STOXX 600 index lost 0.22% and MSCI's gauge of stocks across the globe shed 0.09%.

High-grade euro zone bond yields were lower across the board in a risk-off environment, with the ousting of Austrian Chancellor Sebastian Kurz adding to nervousness.

U.S. yields were also lower. Benchmark 10-year Treasury notes yielded 2.26%, down six basis points. The U.S. Treasury Department sold five-year government notes on Tuesday at a yield of 2.065%, the lowest yield for 5-year Treasuries since October 2017.

Trade worries remained high. U.S. President Donald Trump said on Monday that Washington was not ready to make a deal with China, but that he expected one in the future. At the same time, he pressed Japanese Prime Minister Shinzo Abe to reduce Japan's trade imbalance with the United States.

Hope for a U.S.-China trade agreement still underpins optimism in global markets.

"Markets are holding their nerve and will start to attach great hope to the meeting between Presidents Xi and Trump in June," said BNP Paribas' Harte. "But I'm not as convinced that Trump wants a deal.

"The big risk is that the U.S. starts being disruptive to supply chains ... and the big problem is we don't really understand how much damage this will do."

Auto stocks rose globally after Fiat Chrysler confirmed it had proposed a merger with Renault, a deal that would create the world's third-biggest carmaker. The rally spilled into Asia with Mitsubishi Motors Corp 7211.T in Japan adding 5.95% and Nissan Motor Co 7201.T gaining 2.31%.

The dollar index, which tracks the U.S. currency against a basket of six other major currencies, rose 0.17% higher at 97.782.

In commodity markets, oil prices extended gains after rising more than 1% on Monday. Prices rose on tensions in the Middle East and continuing Russian supply disruptions after a contamination problem discovered last month.

Brent crude was 0.31% higher at $70.33 per barrel, having earlier dipped below the $70 mark. U.S. West Texas Intermediate crude gained 1.16% to $59.31 per barrel.

(GRAPHIC-Global assets in 2019 link: http://tmsnrt.rs/2jvdmXl).

(GRAPHIC-Global currencies vs. dollar link: http://tmsnrt.rs/2egbfVh).

(GRAPHIC-Emerging markets in 2019 link: http://tmsnrt.rs/2ihRugV).

(GRAPHIC-MSCI All Country Wolrd Index Market Cap link: http://tmsnrt.rs/2EmTD6j).

(Reporting by David Randall; Editing by Dan Grebler and Tom Brown)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

Greek police clash with protesters in rally against mandatory vaccinations
World

Greek police clash with protesters in rally against mandatory vaccinations

ATHENS (Reuters) - Greek police used teargas and water cannon to disperse people who had gathered in central Athens on Saturday to protest against mandatory COVID-19 vaccinations. More than 4,000 people rallied outside the Greek parliament for a third time this month to oppose mandatory inoculations for some workers, such as healthcare and nursing staff.

Two Turkish soldiers killed in attack in northern Syria
World

Two Turkish soldiers killed in attack in northern Syria

ISTANBUL (Reuters) - Two Turkish soldiers were killed and two were wounded in an attack on their armoured vehicle in northern Syria, and Turkish forces immediately launched retaliatory fire, Turkey's defence ministry said on Saturday. "Our punitive fire against terrorist positions is continuing," the statement on Twitter on said. It did not specify where the attack occurred, but media reports said it was in the al-Bab area.

Brazilians take to streets again to demand Bolsonaro's impeachment
World

Brazilians take to streets again to demand Bolsonaro's impeachment

By Marcelo Rochabrun SAO PAULO (Reuters) - Protesters took to the streets in several Brazilian cities on Saturday to demand the impeachment of far-right President Jair Bolsonaro, whose popularity has fallen in recent weeks amid corruption scandals against the backdrop of the pandemic. This week, news broke that Brazil's defense ministry told congressional leadership that next year's elections would not take place without amending the country's electronic voting system to include a paper trail of each vote. Bolsonaro has suggested several times without evidence that the current system is prone to fraud, allegations that Brazil's government has denied