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? Equities fall, dollar strengthens amid mounting trade concerns.
? Two-day G-7 summit in focus.
? German Bund yields fall; Italian bond yields up.
? S&P 500 set to open lower.
? Brent falls.
The dollar strengthened and global stocks fell as trade frictions between the U.S. and its allies rose ahead of a G-7 summit starting June 8. Ten-year yields on German Bunds fell, as pressure mounted on Italian government debt. Emerging market currencies tumbled despite a $50 billion IMF bailout for Argentina, and futures pointed to Wall Street opening sharply lower.
The Euro Stoxx 50 lost 0.71% and the FTSE 100 was down 0.59% before 7 a.m. ET. In Asia, the Shanghai Composite had declined 1.36% and Hong Kong's Hang Seng index slid 1.86%.
Futures point to the S&P 500 opening down 0.57%.
French President Emmanuel Macron said he would not sign a G-7 joint statement if there is no progress on tariffs, after the U.S. imposed levies on steel and aluminum, prompting retaliation from its allies. Canadian Prime Minister Justin Trudeau said he would continue to prioritize the interests of Canadian citizens.
In an apparent response, U.S. President Donald Trump wrote on Twitter: "Please tell Prime Minister Trudeau and President Macron that they are charging the U.S. massive tariffs and create non-monetary barriers. The EU trade surplus with the U.S. is $151 Billion, and Canada keeps our farmers and others out."
"If there is no clear agreement and the differences widen further, this is likely to weigh risk assets on Monday as the threat of global trade wars would increase further," according to ING Research. This should help the U.S. dollar, which could strengthen against emerging market and most other major currencies, except the yen, it said.
Germany's DAX index fell 0.83% as industrial production fell and the trade surplus narrowed in April, suggesting that the economy has shifted down a gear in 2018, according to Jack Allen, European economist at Capital Economics.
The euro and sterling fell 0.55% and 0.27% against the dollar as of 7:04 a.m. ET, while the yen strengthened 0.42%.
Pressure mounted on emerging market currencies. The South African rand lost 1.76% and the Mexican peso shed 0.35% against the dollar. Argentina clinched a $50 billion three-year standby agreement with the International Monetary Fund.
The Turkish lira slid almost 0.9% against the dollar after rallying on another rate hike from the country's central bank June 7. The rate hike "was a tentative sign that it is shifting its focus away from simply shoring up the lira and towards tackling high and rising inflation," Capital Economics' Jason Tuvey said. "The key now is whether more orthodox policymaking lasts beyond this month's election."
Ten-year U.S. Treasury yields were little changed at 2.916% as investors awaited the U.S. Federal Reserve's monetary policy decision next week.
Italian bonds dropped, with 2-year yields climbing 11 basis points to 1.611% and 10-year yields rising nearly 8 basis points to 3.077%.
Ten-year yields on German Bunds shed more than 5 basis points to 0.431%. Yields on 10-year French debt fell while those on Spanish sovereign bonds were little changed. Recent hawkish speeches from ECB officials have fed expectations that the central bank will announce an end to its bond-buying program next week.
The Canadian dollar fell 0.35% against the dollar ahead of housing starts and labor force data.
Brent crude oil dipped 0.85% on the ICE Futures Exchange to $76.66 per barrel. Gold was little changed at $1,303.70 per ounce.
More from S&P Global Market Intelligence:
Experts say NAFTA imperiled but not dead
Argentina, IMF reach 3-year $50B stand-by arrangement
Numbers do not add up to a new round of tax cuts this year
US electricity sector to push gas producers to boost environmental performance
Biotechs grapple with risks as Right To Try becomes a reality
With Flipkart, Walmart stakes claim in India's competitive payments market
Oil majors' 'agnostic' future may lead to investment in battery minerals: expert
The day ahead:
8:15 a.m. ET — Canada housing starts (Econoday consensus: 220,000 AR)
8:30 a.m. ET — Canada labor force survey (Econoday consensus: 25,000 employment, 5.8% unemployment)
10 a.m. ET — U.S. wholesale trade (Econoday consensus: inventories 0.1% monthly)
1 p.m. ET — U.S. Baker-Hughes rig count
9:30 p.m. ET — China consumer price index (Econoday consensus: 1.8% yearly)
9:30 p.m. ET — China producer price index (Econoday consensus: 3.8% yearly)

