? Equities fall after U.S. imposes tariffs on $50B Chinese goods
? Bond yields edge lower.
? DAX falls after Audi arrest.
? S&P 500 set to open lower.
Share markets fell and 10-year Treasury yields slipped amid trade-related jitters after the U.S. moved to impose 25% tariffs on $50 billion worth of Chinese goods, prompting China to retaliate with similar levies. Brent crude rose amid reports that the world's top oil-producing countries are debating boosting production by up to 600,000 barrels a day ahead of a June 22 meeting. Futures pointed to the S&P 500 opening more than 0.5% lower.
The Euro Stoxx 50 fell 0.98%, and the FTSE 100 retreated 0.36% lower as of 6:30 a.m. ET. Earlier, the Nikkei 225 index closed 0.75% lower in Tokyo. Stock markets in Shanghai and Hong Kong were closed for a holiday.
The DAX Index sank 1.3% in Frankfurt, with shares in Audi AG and Volkswagen AG sliding 1.5% and 3.3%, respectively, after Audi's chief executive, Rupert Stadler, was taken into custody in the "dieselgate" emissions scandal.
The dollar fell as much as 0.2% against the yen and the franc and was little changed against the euro.
With the lack of meaningful U.S. data points in the week ahead, "it will be the risk sentiment driven by the rising / falling (likely the former) probability of escalating trade wars that should be the key driver of U.S. dollar crosses this week," said Chris Turner, head of foreign exchange strategy at ING.
Yields on 10-year U.S. Treasurys fell 1 basis point to 2.914% following U.S. President Donald Trump's tariff move targeting China and a pledge to impose more tariffs if the country retaliates.
Markets have been weighed down by the U.S. action, and the threat of further escalation is still possible, but the amount of the tariffs in the "wider scheme of things is still quite small in economic terms," said Michael Hewson, chief market analyst at CMC Markets UK. However, "sentiment may deteriorate further if these trade frictions start to become embedded or even get worse as they will act as a drag on a global economy, already showing signs of some softness," he warned.
Brent crude oil fell earlier in the day but climbed to 0.86% to $74.07 per barrel on the ICE Futures Exchange after Bloomberg News reported that the Organization of the Petroleum Exporting Countries is discussing an output hike of between 300,000 and 600,000 barrels a day over the next few months ahead of their June 22 meeting in Vienna, citing people briefed on the talks.
Warren Patterson, commodities strategist at ING, had earlier expected the group to agree on a gradual rollback of output cuts by between 800,000 and 1 million barrels per day until the end of 2018.
Aside from speculation that "OPEC will aggressively lift production leading to an oversupplied market again, the looming U.S.-initiated full blown trade war with the rest of the world has contributed materially to the most recent declines," noted analysts at TD Securities. Brent crude oil prices have fallen since climbing to just below $80 per barrel May 23.
Yields on most European sovereign bonds dipped. Investors will focus on eurozone confidence data as it will provide a signal on whether June has marked the end of the eurozone soft patch, ING analysts said. Yields on 10-year Greek bonds eased 3 basis points to 4.471% after the government survived a no-confidence vote over the weekend.
Yields on 10-year German Bunds were little changed at 0.399% as German Chancellor Angela Merkel met with leaders of her Christian Democratic Union amid a rift with a coalition partner on migration policy, although analysts earlier said a government collapse was unlikely.
Gold rose 0.38% to $1,283.30 per ounce.
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The day ahead:
10:00 a.m. ET — U.S. housing market index (Econoday consensus: 78)
1 p.m. ET — Atlanta Federal Reserve Bank President Raphael Bostic speaks
4 p.m. ET — San Francisco Federal Reserve Bank President John Williams speaks