Gold, Treasuries rise as recession, trade fears rattle investors
By Herbert Lash and Rodrigo Campos NEW YORK (Reuters) - Declining stocks on Wall Street weighed down a global equities gauge on Tuesday on lingering worries about the U.S.-China trade war, while demand for U.S. Treasuries and precious metals rose on recession fears. The U.S.
By Herbert Lash and Rodrigo Campos
NEW YORK (Reuters) - Declining stocks on Wall Street weighed down a global equities gauge on Tuesday on lingering worries about the U.S.-China trade war, while demand for U.S. Treasuries and precious metals rose on recession fears.
The U.S. yield curve inversion deepened to levels not seen since 2007 and gold futures rose as recession concerns gripped investors. Silver touched a two-year high.
Stocks opened higher on Wall Street after U.S. President Donald Trump said China had offered to resume trade talks, though uncertainty prevailed as Beijing declined to confirm Trump's assertion.
U.S. stocks initially opened higher, building on Monday's advance after Trump's comments. China's foreign ministry, however, reiterated on Tuesday that it had not received any recent U.S. telephone calls on trade.
"It is going to be pretty confusing and unfortunately, without some kind of a major backpedaling on trade... the economy is going to suffer," said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.
Bank shares <.SPXBK>, which tend to weaken in lower rate and soft economic environments, lost 1% on Wall Street.
The Dow Jones Industrial Average <.DJI> fell 120.93 points, or 0.47%, to 25,777.9, the S&P 500 <.SPX> lost 9.22 points, or 0.32%, to 2,869.16 and the Nasdaq Composite <.IXIC> dropped 26.79 points, or 0.34%, to 7,826.95.
The pan-European STOXX 600 index <.STOXX> rose 0.63% and MSCI's gauge of stocks across the globe <.MIWD00000PUS> gained 0.03%.
Emerging market stocks rose 0.39%. Nikkei futures
The deepening yield curve inversion reflects investor nervousness about a recession and uncertainties over the trade conflict between China and the United States.
"It's not a sign of confidence in inflation or a pick-up in growth," said Mike Lorizio, head of Treasuries trading at Manulife Asset Management in Boston.
Benchmark 10-year notes
The yield curve inversion also pressured the dollar.
"You have seen a push deeper into inversion in the 2s/10s curve. Today, it's hard to put your finger on one specific driver of that inversion - though that might be contributing to the general sense of risk-off in the market," said Brian Daingerfield, macro strategist at RBS Securities.
The dollar fell against the safe-haven Japanese yen while the euro declined against the greenback.
The dollar index <.DXY> fell 0.05%, with the euro
The Japanese yen strengthened 0.35% versus the greenback at 105.77 per dollar, while Sterling
Emerging market currencies suffered across the globe, with the Colombian peso
Oil prices rose, buoyed by expectations of a drawdown in U.S. crude inventories, though gains were capped by worries about a recession and uncertainty over a China-U.S. trade deal.
(Reporting by Herbert Lash and Rodrigo Campos; additional reporting by Sinead Carew, Kate Duguid, Chuck Mikolajczak, Jessica Resnick-Ault and Richard Leong; Editing by Dan Grebler)
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