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Stocks decline amid trade tensions, Italian turmoil; pound down over GDP shrink


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Stocks decline amid trade tensions, Italian turmoil; pound down over GDP shrink

US puts Huawei license decision on hold amid worsening trade row.

➤ Italy bonds sell off on fears of coalition collapse.

UK GDP unexpectedly contracts for 1st time in nearly 7 years.

➤ Turkish lira falls as central bank removes chief economist, others from posts.

Global stocks registered losses amid continuing trade tensions and a series of economic data releases, including a surprise GDP contraction in the U.K. Mounting political turmoil in Italy sent Italian bonds tumbling.

The U.S. has put on hold the review process of licenses requested by domestic companies hoping to resume business with Huawei Technologies Co. Ltd. China previously moved to halt U.S. agricultural imports.

In Europe, the FTSE 100 declined 0.2% around 6:30 a.m. ET. France's CAC 40 and Germany's DAX lost around 1% each. Overnight, the Shanghai SE Composite and Hong Kong's Hang Seng fell 0.7% each, while Japan's Nikkei 225 gained 0.4%.

U.S. futures point to a lower open for the S&P 500 and Nasdaq 100 on Aug. 9, having closed 1.9% and 2.3% higher, respectively, yesterday. Shares of Uber Technologies Inc. were trading 8% lower in the pre-market trading following its earnings.

Italy's FTSE MIB index tumbled 2.4% while the yield on 10-year Italian bonds soared 21 basis points as its deputy prime minister, Matteo Salvini, and his League party called for new elections over differences with coalition partner Five Star Movement. Salvini has sought a no-confidence vote in parliament.

The yield on 10-year German bunds lost 2 basis points.

Ipek Ozkardeskaya from the London Capital Group believes that political tensions in Italy could widen yield spread between German and Italian bonds, adding downside pressure on the euro and fueling expectations of a stronger rate cut by the European Central Bank in September.

The yield on 10-year U.S. bonds also lost 2 basis points.

Among currencies, sterling shed 0.4% versus the dollar as data showed U.K.'s economy unexpectedly contracted in the second quarter for the first time since 2012.

The euro was trading 0.2% higher against the dollar. Indonesian Trade Minister Enggartiasto Lukita said he would propose 20% to 25% in tariffs on dairy imports from the EU, which previously proposed anti-subsidy duties on the imports of Indonesia's palm biodiesel.

The Chinese yuan edged 0.2% lower as the People's Bank of China set the currency's reference rate to a fresh 11-year low of 7.0136 per dollar but stronger than markets had predicted. Meanwhile, China's annual consumer inflation climbed 2.8% in July from June's 2.7% print, while producer prices contracted for the first time in three years.

The Japanese yen added 0.2% as data showed Japan's GDP expanded more than expected in the second quarter. The Turkish lira depreciated 0.6% against the dollar amid news that the Türkiye Cumhuriyet Merkez Bankası AS removed at least nine senior officials from their posts, including the chief economist.

The dollar index, which measures the U.S. currency's performance against a basket of major peers, was little changed.

In commodities, Brent crude rose 1.5% to $58.21 per barrel, and gold gained 0.4%.

More from S&P Global Market Intelligence:

India's biggest banks post Q1 net profits as provisions fall

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July gas flows rose at US LNG plants as Cameron LNG went through preflight

The day ahead:

8:15 a.m. ET – Canada housing starts (Econoday consensus: 208,000 annual rate)

8:30 a.m. ET – U.S. PPI – FD (Econoday consensus: 1.7% yearly)

8:30 a.m. ET – Canada labor force survey ((Econoday consensus: 6,000)

1 p.m. ET – U.S. Baker-Hughes rig count