U.S. stocks fell on Friday after Reuters and others reported that the Trump administration is considering delisting Chinese companies from U.S. stock exchanges, fueling more worries about the U.S.-China trade war.
The Dow Jones Industrial Average fell 68.36 points, or 0.25 per cent, to 26,822.76, the S&P 500 lost 15.67 points, or 0.53 per cent, to 2,961.95 and the Nasdaq Composite dropped 91.03 points, or 1.13 per cent, to 7,939.63.
The tariff-sensitive Philadelphia semiconductor index extended its decline to 2.4 per cent. The index was already under pressure from Micron Technology Inc’s tumble after it forecast a disappointing first-quarter profit.
The S&P technology sector dropped 1.3 per cent. U.S.-listed shares of Alibaba Group Holding Ltd, Baidu Inc and JD.com Inc were sharply lower.
High-level trade talks between Washington and Beijing are scheduled for next month before the start of the third-quarter earnings season.
“If our policies spark a major sell off in Shanghai where that creates problems for China that could negatively impact the trade negotiations which are supposed to start on Oct. 10. That is where the U.S. based fear would come from,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
Adding to the negative momentum, the S&P 500 index fell below its 50-day moving average in afternoon trading.
Canada’s main stock index also dropped on Friday, sustaining its first weekly loss in five, as shares in miners dropped due to a decline in gold prices.
The Toronto Stock Exchange’s S&P/TSX composite index was down 96.13 points, or 0.57 per cent, at 16,694.27.
Canadian stocks suffered their worst weekly declines since mid-August as worries about the U.S.-China trade war, an impeachment probe of U.S. President Donald Trump and weak economic data in Europe and China all fed into fears of a global recession.
The materials sector, which includes precious and base metals miners, lost 1.7 per cent after gold prices fell amid a strengthening U.S. dollar. Silver also fell more than 1 per cent.
Shares of Kinross Gold Corp. and Agnico Eagle Mines Ltd. were among the top losers on the main index, down 5.6 per cent and 4.5 per cent, respectively.
First Quantum Minerals Ltd. recovered from their worst one-day percentage fall in a month on Thursday, becoming one of the top gainer on the TSX with a 4.4-per-cent gain.
U.S. data showed consumer spending barely rose in August and business investment remained weak, suggesting the American economy was losing momentum as trade tensions linger.
Still, the Commerce Department reports likely do not signal a recession is looming as consumer spending remains supported by solid income growth thanks to the lowest unemployment rate in nearly 50 years and massive savings.
“The market is in a holding pattern for a bunch of different reasons; one is the data has gotten better but it’s still very much mixed,” said Joseph LaVorgna, chief economist for the Americas at Natixis in New York.
“There’s no catalyst to push equities meaningfully higher or lower, so we’re going to wait and see what the next surprise is. Either it’s data or something on the political front,” he said.
A strong rally in mining shares propped up European shares, but they ended the week lower for the first time in five weeks as concerns about economic growth and trade, as well as political worries, kept a lid on gains.
The pan-European STOXX 600 index closed up 0.47% and the FTSEurofirst 300 index of leading regional shares gained 0.41%.
Earlier in the day, Asia-Pacific shares outside Japan were buffeted by the political worries in the United States and shed 0.3%.
Oil prices fell on Friday and posted a weekly loss on a faster-than-expected recovery in Saudi output, while investors also worried about global crude demand amid slowing Chinese economic growth.
During a volatile session, Brent crude futures fell 83 cents, or 1.3 per cent, to settle at $61.91 a barrel, after dropping to a session low of $60.76 a barrel.
U.S. West Texas Intermediate (WTI) crude futures fell 50 cents, or 0.9 per cent, to settle at $55.91 a barrel. It hit a session low of $54.75 a barrel.
Brent fell 3.7 per cent for the week, its biggest weekly loss since early August. WTI lost 3.6 per cent, its steepest loss since mid-July.
Crude futures fell along with other higher-risk assets after news the U.S. government is considering the possibility of delisting Chinese companies from U.S. exchanges, a source briefed on the matter said on Friday. The move would be a radical escalation of trade tensions between the U.S. and China.
Earlier in the session, futures fell after Iranian President Hassan Rouhani said the United States offered to remove all sanctions on Iran in exchange for talks. However, U.S. President Donald Trump then said he had refused the request by Tehran.
Reuters