NEW YORK/LONDON : Equities around the world fell and U.S. Treasury yields rose on Thursday as investors worried about global trade tensions after U.S. President Donald Trump threatened duties of 200 per cent on European beverage imports if the EU does not remove U.S. whiskey surcharges.
Investors were also keeping an eye on wrangling over a possible, partial, U.S. government shutdown.
Thursday’s Labor Department’s Bureau of Labor Statistics data showed U.S. producer prices (PPI) were unexpectedly unchanged in February. This was after Wednesday’s data showed U.S. consumer prices (CPI) rose more slowly than expected.
But investors worried that the cooling trend would not be sustainable as tariffs on imports raise prices in coming months.
“The February CPI and PPI reports were both better than expected, and show that the turn of the year spike in inflation was likely noise and not signal,” said Bill Adams, Chief Economist for Comerica Bank in a research note.
But he wrote that the inflation outlook depends more on government policies as tariffs, deportations and Department of Government Efficiency (DOGE) moves than “the backward-looking data releases right now.”
Trump’s increased tariffs on all U.S. steel and aluminium imports took effect on Wednesday, drawing swift retaliation from Canada and the European Union.
“The guidance out of the White House is so erratic that investors cannot absorb every news flash into their investment strategies,” said Peter Andersen, founder of Andersen Capital Management.
On Wall Street, at 10:52 a.m. the Dow Jones Industrial Average fell 135.84 points, or 0.33 per cent, to 41,212.42, the S&P 500 fell 22.11 points, or 0.41 per cent, to 5,576.26 and the Nasdaq Composite fell 135.68 points, or 0.78 per cent, to 17,510.56.
MSCI’s gauge of stocks across the globe fell 3.58 points, or 0.43 per cent, to 827.27.
The pan-European STOXX 600 index fell 0.01 per cent after rising 0.81 per cent in the previous day’s session.
While the U.S. S&P 500 index is now down more than 5 per cent for the year, European stocks are faring better with support from government spending plans for defence and a potential Ukraine peace deal. Year-to-date the STOXX index is up more than 6 per cent year to date, despite slipping in recent weeks.
U.S. Treasury yields rose on Thursday, on concerns about the potential for higher inflation due to tariffs despite the cooler than expected inflation.
The yield on benchmark U.S. 10-year notes rose 1.2 basis points to 4.328 per cent, from 4.316 per cent late on Wednesday.
The 30-year bond yield rose 1.2 basis points to 4.6433 per cent from 4.631 per cent late on Wednesday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 0.2 basis points to 3.993 per cent, from 3.995 per cent late on Wednesday.
In currencies, the U.S. dollar was a mixed bag.
The euro was down 0.25 per cent at $1.0859 but against the Japanese yen, the dollar weakened 0.22 per cent to 147.91.
However, against the Swiss franc, the dollar strengthened 0.25 per cent to 0.884.
After rallying on Wednesday on a larger-than-expected draw in U.S. gasoline stocks, oil prices slipped on Thursday as traders weighed macroeconomic concerns and demand versus supply expectations.
U.S. crude fell 0.55 per cent to $67.31 a barrel and Brent fell to $70.59 per barrel, down 0.51 per cent on the day.
Gold prices gained on Thursday, holding near all-time high levels, as elevated tariff uncertainty and bets on Federal Reserve policy easing kept bullion’s appeal strong.
Spot gold rose 1.26 per cent to $2,968.99 an ounce. U.S. gold futures rose 0.94 per cent to $2,966.60 an ounce.
