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A gauge of global equity markets eased and the U.S. dollar slipped on Monday as investors took a dim view of an expected new round of tariffs from Washington on Chinese goods, which would escalate a simmering U.S.-Sino dispute over trade.

U.S. President Donald Trump said he would announce his latest plan on China tariffs after the markets close. He is expected to level them on about $200-billion of Chinese imports and China has said it would retaliate.

A weaker dollar lifted gold prices and the price of most industrial metals slipped as the tit-for-tat dispute has fueled concerns that demand for metals will weaken.

Apple and Amazon.com bore the brunt of investor worries about the tariffs, which were on a list unveiled in July that included $200 billion worth of internet technology products, other electronics, printed circuit boards and consumer goods.

“Investors are slowly starting to realize that these new tariffs could be extremely disruptive to the supply chain,” said Art Hogan, chief market strategist at B. Riley FBR in New York.

The trade tiff has yet to be felt in U.S. markets as the tariffs, which now are set at 3.8 per cent, may rise to just 10 per cent, which most companies can handle in a growing economy, said Brian Nick, chief investment strategist at said on Monday he would announce his latest plan on China tariffs after the markets close.

MSCI’s gauge of stocks across the globe shed 0.31 per cent while the pan-European FTSEurofirst 300 index of leading regional shares closed up 0.07 per cent.

The Dow Jones Industrial Average fell 92.62 points, or 0.35 per cent, to 26,062.05, the S&P 500 lost 16.17 points, or 0.56 per cent, to 2,888.81 and the Nasdaq Composite dropped 114.25 points, or 1.43 per cent, to 7,895.79.

In Toronto, the S&P/TSX composite index rose 68.86 points, or 0.43 per cent, to 16,082.31.

The materials sector, which includes precious and base metals miners and fertilizer companies, added 2 per cent, as gold prices gained due to a softer dollar.

Iamgold Corp. jumped 7 per cent, while Yamana Gold Corp. and Kinross Gold Corp. finished up 4.4 per cent and 4.2 per cent, respectively. Goldcorp Inc. and Nutrien Ltd. rose 3.3 per cent.

Aurora Cannabis Inc. jumped 16.9 per cent, the most on the index, after a media report that the world’s largest beverage maker Coca Cola Co was in talks with the company to make marijuana-infused drinks. Rival Canopy Growth Corp. rose 2.8 per cent.

The Canadian dollar was little changed against its U.S. counterpart on Monday as investors sat tight ahead of potential news on trade after buying option structures in recent days that could profit from increased volatility in the currency.

Canada runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows.

The country has its own trade feud with the United States and is also in talks to revamp the North American Free Trade Agreement.

“There are quite a few names that are sitting on long butterfly positions, so they’ll make money if it (the Canadian dollar) moves up or down,” said Simon Côté, managing director, risk management solutions, National Bank Financial. “We just need a decent move either way before they take profit or restructure what they have.”

The Canadian dollar was trading nearly unchanged at 1.3029 to the greenback, or 76.75 U.S. cents. The currency, which rose nearly 1 per cent last week, traded in a range of 1.3002 to 1.3048.

The U.S. dollar’s weakening is a good sign for global markets, especially in emerging markets where the strong dollar has been a cause for concern, Nuveen’s Nick said.

The greenback has benefited from safe-haven flows as the U.S.-Chinese trade conflict worsened.

The euro and sterling also advanced against the dollar on optimism that Britain would reach a deal with the European Union on the terms of its departure from the bloc.

The Spanish government and the EU’s chief negotiator said they would stick to the current calendar that foresees finalizing Brexit negotiations before the European summit in October.

The dollar index fell 0.44 per cent and the euro rose 0.46 per cent to $1.1681. The Japanese yen strengthened 0.18 per cent versus the greenback at 111.84 per dollar.

U.S. Treasury yields rose across the board on growing expectations the Federal Reserve would raise interest rates in September and December, and perhaps at least twice more in 2019.

Yields on the 10-year U.S. Treasury note touched 3.022 per cent, the highest level since late May. U.S. 30-year yields also hit a four-month peak of 3.159 per cent, while 2-year yields soared to 2.799 per cent, the strongest level in 10 years.

The benchmark U.S. 10-year note last fell 1/32 in price to yield 2.9977 per cent.

Yields on 10-year German bunds rose to 0.472 per cent, but pared losses to trade at 0.458 per cent.

Oil prices edged lower on concerns over how the U.S.-Sino trade dispute may dent global crude demand, but losses were limited as the market weighed potential supply tightening due to Iran sanctions.

Brent crude futures fell 4 cents to settle at $78.05 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 8 cents to $68.91 a barrel.

U.S. gold futures for December delivery settled up $4.70 at $1,205.80 per ounce.

Reuters

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 24/05/24 3:59pm EDT.

SymbolName% changeLast
AAPL-Q
Apple Inc
+1.66%189.98
NTR-T
Nutrien Ltd
-1.07%80.44
G-T
Augusta Gold Corp
+1.85%1.1
K-T
Kinross Gold Corp
+1.94%11.04
WEED-T
Canopy Growth Corp
-0.08%12.52
AMZN-Q
Amazon.com Inc
-0.17%180.75
ACB-T
Aurora Cannabis Inc
+2.71%9.08

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