An index of global stock markets gave up early gains after Chinese agriculture officials who were to visit U.S. farm states next week canceled their trip, dampening optimism on U.S.-China trade talks.
Revived worries about the state of the ongoing trade tensions between Washington and Beijing drove Treasury yields lower and pushed the U.S. dollar down against the safe-haven Japanese yen.
Stocks had started the day stronger as stimulus measures by major central banks eased worries about growth. But optimism faded following the report that the Chinese officials canceled their visit.
The cancellation came as U.S.-Chinese trade talks were held in Washington and U.S. President Donald Trump said he wanted a complete trade deal with the Asian nation, not just an agreement for China to buy more U.S. agricultural goods.
The MSCI world equity index, which tracks shares in 47 countries, was 0.07 per cent lower.
Canada’s main stock index hit a record high in a broad-based rally on Friday, with energy shares outperforming as they continue to track gains in oil prices.
The Toronto Stock Exchange’s S&P/TSX Composite index touched a fresh all-time high of 16,947.23 points and was on track to clock its fourth straight week of gains.
The TSX unofficially closed up 41.34 points, or 0.25 per cent, at 16,899.69.
The energy sector jumped 0.5 per cent, despite a slide in oil prices.
Tensions in the Middle East also helped push prices of gold higher, while palladium hit a record peak on short supply.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 1 per cent.
Also buoying sentiment was data which showed Canadian retail sales were up 0.4 per cent in July from June on stronger sales of new cars at motor vehicle and parts dealers, Statistics Canada said.
Financials rose 0.4 per cent, while industrials and tech stocks dropped 0.8 per cent and 0.9 per cent, respectively.
On Wall Street, stocks, which had started the day strong following China cutting a key lending rate for the second straight month, reversed course on the news of the canceled farm visits.
Equity markets have largely welcomed the central bank moves in recent days, including interest rates cuts by the European Central Bank and the U.S. Federal Reserve.
“It’s trade-related and markets are just hyper-sensitive to trade,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
The Dow Jones Industrial Average fell 160.19 points, or 0.59 per cent, to 26,934.6, the S&P 500 lost 15.08 points, or 0.50 per cent, to 2,991.71 and the Nasdaq Composite dropped 65.21 points, or 0.8 per cent, to 8,117.67.
The pan-European STOXX 600 index finished up 0.29 per cent, after giving up some of the gains logged earlier in the session.
Increased concerns that the United States and China are unlikely to forge a trade deal in the near term drove U.S. Treasury yields lower.
Benchmark 10-year notes gained 5/32 in price to yield 1.7579 per cent, down from 1.774 per cent on Thursday.
Bonds were also supported after the New York Federal Reserve said it plans to pour cash into the U.S. banking system through early October to avert another market disruption, after the cost of loans in the overnight repurchase agreement (repo) market soared to 10 per cent on Tuesday.
In foreign exchange markets, the dollar fell sharply against the yen as investors weighed the latest developments on the U.S.-China trade front.
The yen tends to attract demand in times of market stress as the currency is backed by Japan’s current account surplus, which offers it more resilience than currencies of deficit-running countries.
The dollar was 0.27 per cent lower against the Japanese currency. Against a basket of major currencies, the greenback was up 0.24 per cent.
Lingering tensions in the Middle East along with increased worries about the trade tensions supported gold, and the yellow metal was on pace for its first weekly rise in four. Spot gold was up 0.81 per cent at $1,511.21 an ounce.
Oil prices eased on Friday on renewed concern over the U.S.-China trade war, but futures still posted weekly gains, with Brent marking its biggest weekly increase since January, after an attack on Saudi Arabia’s energy industry last weekend.
Brent crude futures fell 12 cents to settle at $64.28 a barrel, while U.S. West Texas Intermediate (WTI) crude futures ended 4 cents lower at $58.09 a barrel.
Prices pared gains along with the stock and grains markets after Chinese agriculture officials that were due to visit U.S. farm states next week cancelled their trip to Montana and Nebraska to return to China sooner than originally scheduled.
The cancellation came as trade talks were held in Washington and U.S. President Donald Trump said he wanted a complete trade deal with the Asian nation, not just an agreement for China to buy more U.S. agricultural goods.
For the week, however, Brent rose 6.7 per cent, its biggest gain since January, while WTI gained 5.9 per cent, the most since June.
The oil market jumped nearly 20 per cent on Monday in reaction to the Sept. 14 attack, which halved Saudi production and cut global supplies by about 5 per cent. But prices have since pared most of those gains on assurances from the kingdom that it would restore lost production by the end of this month.