World stocks edged lower and debt yields fell on Thursday as Chinese economic data slowed in October and Germany narrowly avoided a recession in the third quarter, adding to concerns about the impact of the U.S.-China trade war on global growth.
MSCI’S All-Country World index, which tracks the performance of equity markets in 47 countries, slid 0.13 per cent while gold prices rose, moving further away from a three-month low hit on Tuesday.
The U.S. dollar fell against the Japanese yen and traded near break-even to slightly lower against the euro on diminished risk appetite due to the difficult nature of the U.S.-China trade talks amid ongoing political turmoil in Hong Kong.
The driver of investor sentiment is the status of a “phase one” trade agreement, which had appeared to be in the cards but not any more, said Kristina Hooper, chief global market strategist at Invesco.
“Phase one had been considered a fait accompli, and it’s not and that’s becoming clear,” Hooper said.
China wants tariffs imposed by U.S. President Donald Trump to be removed but has not made the agricultural purchases the United States wants because swine flu has decimated its pork industry and eliminated the need for U.S. soybeans.
“It really suggests that phase one is on shaky grounds and if you can’t get a phase one, forget about anything else,” Hooper said.
In Toronto, the Toronto Stock Exchange’s S&P/TSX composite index was up 14.19 points, or 0.08 per cent, at 16,972.18.
Seven of the index’s 11 major sectors were higher, led by the industrial and real estate sectors.
The materials sector, which includes precious and base metals miners, was up 0.4 per cent as gold futures rose, while the financial sectors finished up 0.2 per cent.
The energy slid 0.5 per cent.
The biggest drag on the index were healthcare shares, down 3.8 per cent with Canopy Growth Corp falling the most at 14.3 per cent. Aurora Cannabis Inc. was down 9.1 per cent, while Cronos Group Inc. was lower by 5.6 per cent.
Leading the index were Ag Growth International Inc., up 7.6 per cent, Superior Plus Corp., up 6.2 per cent, and Ballard Power Systems Inc., higher by 5.6 per cent.
The benchmark S&P 500 posted a slim gain to end with a record closing high on Thursday, as a dour forecast from tech stalwart Cisco Systems Inc was offset by a strong report from big box retailer Walmart Inc .
The Dow Jones Industrial Average fell 0.47 points, or -0 per cent, to 27,783.12, the S&P 500 gained 2.72 points, or 0.09 per cent, to 3,096.76 and the Nasdaq Composite dropped 3.08 points, or 0.04 per cent, to 8,479.02.
Cisco shares tumbled 7.3 per cent after the network gear maker forecast second-quarter revenue and profit below expectations as increasing global economic uncertainties kept clients away from spending more on its routers and switches.
European shares fell after data showed the German economy grew just 0.1 per cent in the third quarter. Though Germans avoided slipping into a mild contraction thanks to consumer spending, economic growth remained weak nevertheless.
The pan-European STOXX 600 index closed down 0.36 per cent, while Germany’s DAX fell 0.38 per cent, also pulled lower by a 4.5 per cent drop in Daimler shares. The carmaker said tougher emissions rules would hit earnings in 2020 and 2021.
Ten-year bond yields across the euro area fell around 2 basis points each. Germany, French and Dutch yields reached one-week lows,.
France’s 10-year bond yield slipped back into negative territory a week after it turned positive for the first time since July. Germany’s Bund yield fell to a low of -0.353 per cent , down from last week’s three-and-a-half-month low around -0.22 per cent.
In Asia, stocks fell after soft economic data in China and Japan showed the trade war between Beijing and Washington was hitting growth in some of the world’s biggest economies.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.44 per cent. Japan’s Nikkei stock index fell further, dropping 0.8 per cent.
China’s factory output growth slowed significantly more than expected in October, as weakness in global and domestic demand and the drawn-out Sino-U.S. trade war weighed on broad segments of the world’s second-largest economy.
Chinese industrial production growth slowed sharply in October, with the 4.7 per cent year-on-year rise well below forecasts for 5.4 per cent. Investment growth hit a record low and retail sales also missed expectations.
Worries about spiraling violence as anti-government protests intensify in Hong Kong have also soured investor sentiment.
Protesters paralyzed parts of Hong Kong for a fourth day, forcing school closures and blocking highways and other transport links in a marked escalation of unrest in the financial hub.
Hong Kong’s Hang Seng fell 0.8 per cent to a fresh one-month low.
In currency markets, safe havens such as the Japanese yen and Swiss franc gained.
The dollar index fell 0.22 per cent, with the euro up 0.15 per cent to $1.1023. The yen strengthened 0.41 per cent versus the greenback at 108.39 per dollar.
The Swiss franc traded at 0.9880 versus the greenback, also near its highest in more than a week.
The uncertainty over the U.S.-China trade deal also pushed gold higher by denting demand for riskier assets.
U.S. gold futures settled up 0.7 per cent at $1,473.40 per ounce.
Oil prices eased on Thursday as U.S. crude futures were pressured by a build in domestic inventories and record production, but losses were limited by forecasts from the Organization of the Petroleum Exporting Countries for a lower-than-expected oil surplus.
Brent crude futures settled at $62.28 a barrel, down 9 cents, while West Texas Intermediate crude settled at $56.77 a barrel, down 35 cents.
U.S. crude stockpiles grew last week by 2.2 million barrels, the Energy Information Administration said, exceeding the 1.649 million-barrel rise forecast by analysts in a Reuters poll. Production hit a record high.