NEW YORK The dollar fell on Tuesday to its weakest level against the yen since October 2014 and stock markets worldwide slumped as economic data out of Europe and the United States fuelled a retreat from riskier assets.
The Japanese currency, often sought in times of market turmoil or economic uncertainty, strengthened. Bank of Japan Governor Haruhiko Kuroda, speaking to parliament on Tuesday, stressed his readiness to expand monetary policy, such as pushing interest rates further into negative territory.
Wall Street followed declines across Europe and Asia. The MSCI All-World Index .MIWD00000PUS dropped 1.3 percent, putting it on target for its worst day since Feb. 11.
In New York, shares of Dublin-based Allergan (AGN.N) were hammered after the U.S. Treasury Department on Monday unveiled rules designed to curb corporate tax inversion mergers that could possibly stymie the company's tie-up with New York-based Pfizer Inc (PFE.N). A source told Reuters that Pfizer was leaning toward abandoning, not altering, the deal.
Allergan shares slumped 15 percent and were the worst performer on the S&P 500 .SPX while Pfizer shares gained 3.2 percent.
The U.S. trade deficit widened more than expected in February in the latest indication that economic growth weakened further in the first quarter, although other data suggested the economic growth picture could improve in the months ahead.
The Dow Jones industrial average .DJI fell 100.19 points, or 0.56 percent, to 17,636.81, the S&P 500 .SPX lost 18.48 points, or 0.89 percent, to 2,047.65, and the Nasdaq Composite .IXIC dropped 40.24 points, or 0.82 percent, to 4,851.56.
In Europe, the FTSEurofirst 300 share index .FTEU3 dropped 1.9 percent. Germany's DAX index .GDAXI slid 2.6 percent after data showed industrial orders in Germany, Europe's largest economy, unexpectedly fell 2.1 percent in February.
Further muddying the waters for investors, two senior officials of the U.S. Federal Reserve said the market's views of when the central bank would raise interest rates may be too pessimistic.
Just a week ago, Fed Chair Janet Yellen said the U.S. central bank would proceed cautiously in raising rates. Those remarks were viewed as dovish and drove U.S. stocks to their highest levels for the year so far.
Oil steadied after Kuwait said an output freeze by major oil producers would proceed without Iran, shoring up sentiment ahead of weekly data likely to show another record high in U.S. crude inventories.
Brent crude LCOc1 slipped 3 cents to $37.66 a barrel, while U.S. crude CLc1 lost 11 cents to $35.59 a barrel.
Yields on low-risk government bonds fell. German 10-year yields DE10YT=RR, the benchmark for euro zone borrowing costs, fell as far as 0.08 percent, the lowest level in almost a year.
Benchmark U.S. 10-year notes US10YT=RR were last up 16/32 in price to yield 1.7235 percent, down from 1.779 percent on Monday.
Gold, another perceived safe haven and a top-performing asset in the first three months of 2016, rose more than 1.2 percent at $1,229.56 an ounce.
(Reporting by Chuck Mikolajczak; Editing by Leslie Adler)
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Updated Date: Apr 06, 2016 01:00 AM