US stocks sink at the open on renewed trade tension
US stocks opened lower on Thursday morning, while Treasuries and the dollar hit multi-year highs, as the deepening trade dispute between Washington and Beijing weighed on investor sentiment and extended a monthly decline for equities that is shaping up as the biggest since the December tumble.
Tech stocks were particularly hard hit after Chinese surveillance equipment maker Hikvision on Thursday looked set to join Huawei on a US export blacklist, marking a further potential complication to trade negotiations between the US and China.
The S&P 500 was down 1.2 per cent in early trade on Thursday, while the Nasdaq Composite shed 1.4 per cent. The blue-chip Dow Jones Industrial Average fell 1.4 per cent.
Treasuries rallied, driving benchmark yields to their lowest level since December 2017, as investors sought the relative safety of government debt. The yield on the benchmark 10-year US Treasury was down 6.4 basis points at 2.3291 per cent, according to Refinitiv pricing, breaking through the previous lows of mid-March.
The US dollar strengthened. The dollar index, which tracks the greenback against a weighted basket of select global currencies, was up 0.3 per cent to a two-year high of 98.333.
With six trading sessions, including today, to go before the end of May, the S&P 500 is down 4.2 per cent month-to-date, which would be its first — and largest — monthly decline since a 9.2 per cent drop in December, which in turn had been the biggest since February 2009 as the financial crisis approached its nadir.
The Nasdaq Composite is down 5.6 per cent so far in May, while the Dow Jones has shed 4.4 per cent.
On May 13, the S&P 500 fell the most in a single session since January and found itself down 4.5 per cent from the end of April, after China said it would raise tariffs on $60bn of American goods in retaliation for Donald Trump raising the levy on $200bn in Chinese imports to 25 per cent just days earlier.
Media outlets in China ramped up their rhetoric against the Trump administration, with the Chinese Communist party’s flagship newspaper, the People’s Daily, branding the US as the biggest “troublemaker” in the international community for triggering trade disputes.
Stocks in Europe were lower, with the broad Stoxx 600 off 1.3 per cent, while markets in Asia also closed lower across the board on Thursday.