Global stocks, on Wednesday, May 23, sold off while investors raced for the safety of the Japanese yen. World MSCI Index down 0.5 percent.
Some government bonds as concerns rose that setbacks to U.S.-China trade talks would undermine world economic growth.
U.S. President Donald Trump said trade discussions with China would need to be rerouted, saying the current track appeared “too hard to get done” and any agreement reached between the world’s two largest economies needed “a different structure.”
The remarks came a day after Trump said he was not pleased with U.S.-China talks, reversing a rally pegged to the White House’s optimistic comments about the discussions over the weekend that led to a strong rally on Monday.
The Dow Jones Industrial Average fell 107.45 points, or 0.43 percent, to 24,726.96, the S&P 500 lost 8.16 points, or 0.30 percent, to 2,716.28 and the Nasdaq Composite dropped 11.66 points, or 0.16 percent, to 7,366.80.
Trump also floated plans to fine China’s ZTE Corp and cast doubt on a planned June 12 summit with North Korean leader Kim Jong Un.
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Fears over the further dampening of U.S. relations with China and North Korea weighed on equities, and the Federal Reserve’s May meeting minutes due for release on Wednesday were also giving investors pause, analysts said.
“A combination of the Fed and the trade worries will make today a rocky session,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
The minutes, which could indicate the number of rate hikes likely this year, are expected to show the Fed taking a more hawkish tone, Cardillo said.
Broad risk aversion hurt the dollar against the Japanese yen. The Japanese yen strengthened 0.75 percent at 110.08 per dollar.
But the greenback managed to rise to a six-month high against the euro on data indicating a slowdown in European business activity.
The pan-European FTSEurofirst 300 index lost 1.17 percent and MSCI’s gauge of stocks across the globe shed 0.67 percent.
Another reason for the euro’s woes is Italy, where an incoming coalition government comprised of the two anti-establishment parties – the League and 5-Star – looks likely to implement big-spending policies.
That could add to the country’s big debt pile and see Rome clash with the European Union.
Investors were also eyeing Turkey, which is seemingly headed for a full-blown economic crisis as the Turkish lira plunged to record lows, Reuters reports.
