Stock declines deepened globally on Friday, with European equities sliding to the lowest in more than a year and gauges tumbling across Asia as the negative news cycle for risk assets continued.
China announced retaliation against President Donald Trump’s tariffs and there was further turnover in the U.S. administration, compounding a selloff that started in technology shares and escalated when the White House upped its protectionist agenda on Thursday. Traditional havens including gold and the yen jumped as investors sought safer assets.
The Stoxx Europe 600 Index fell for the third day after equity indexes from Tokyo to Shanghai tumbled well over 3 percent. U.S. stock futures slipped further after the S&P 500 Index closed down 2.5 percent, the most in six weeks. The yen strengthened past 105 per dollar for the first time since November 2016 before paring some of its advance. Treasury 10-year yields briefly dipped below 2.8 percent before steadying above that level. The euro strengthened, adding to headwinds for the region’s exporters.
It’s been a miserable week for higher-risk markets globally, as a trade war edged closer, the tech sector was roiled by Facebook Inc.’s privacy scandal and data showed European growth sputtering. Traders had already been bracing for the possibility of slowing expansion as the Federal Reserve reiterated its commitment to further interest-rate increases after Wednesday’s hike.
“The window from coming back from an all-out trade war is still open, but closing fast, and obviously leaves a lot of uncertainty over the next two to three weeks,” said Kay Van-Petersen, a Singapore-based global macro strategist with Saxo Capital Markets. It is “classic risk-off for equities today and potentially over the next few days.”
Adding to the image of the ascendance of the “America first” faction, Trump said he is replacing White House National Security Adviser H.R. McMaster with John Bolton, a controversial foreign-affairs specialist whom the U.S. Senate declined to confirm as President George W. Bush’s ambassador to the United Nations.
Oil prices climbed amid worries that Bolton would pursue a hard-line stance against Iran.
Asia January 29, 2020