Global Stocks Drop Amid Trade Uncertainty

By Caitlin Ostroff and Joanne Chiu 

-- U.S. stock futures, European shares decline

-- British pound weakens

-- Asian equities rally

U.S. stock futures and European equities dropped amid renewed uncertainty about Washington and Beijing resolving disagreements that have weighed on global growth prospects.

Futures tied to the Dow Jones Industrial Average fell 0.2%, as fresh questions emerged over the weekend about unresolved issues between the world's two largest economies, dampening the optimism that followed their steps toward a truce. The pan-continental Stoxx Europe 600 index fell 0.8%.

The U.S. and China said last week they were moving toward an initial trade agreement, with Washington forgoing an increase in tariffs on imports from China that was scheduled for the coming days. While Beijing agreed to boost purchases of U.S. agricultural products, details remained elusive, and disagreements on other issues remained unresolved.

"At the end of the day, all that happened on Friday was the tariffs were postponed," said Michael Hewson, chief market analyst at CMC Markets. The U.S. is still poised to impose an additional round of tariffs starting mid-December.

State-run China Daily published an opinion piece Sunday suggesting that "the champagne should probably be kept on ice," until a deal is signed, as Washington may yet reverse its decision.

"While the U.S. side has played up the agreement, in China, the reports have been much more measured," Jack Allen-Reynolds, senior Europe economist at Capital Economics, said.

Brent crude, the global benchmark for oil, fell 1.8% to $59.39 a barrel as trade concerns dampened the economic growth outlook. Investors sent gold, considered a haven, up 0.7%.

Adding to the global growth concerns, Chinese trade data released Monday showed further declines in the country's exports in September, largely as a result of the trade dispute.

Still, stocks in Asia, which ended trade Friday before President Trump said the U.S. and China had completed the early stages of a deal, rallied Monday. The Shanghai Composite gauge advanced 1.2% while the benchmark Hang Seng Index in Hong Kong rose 0.8%.

In Europe, the pound fell about 1% against the dollar and 0.9% against the euro. The weekend of talks between European Union and British negotiators, who face a deadline this week to reach a deal on Brexit, failed to yield a breakthrough. Diplomats said even the outline of a deal looked difficult to clinch, given the gap between the sides and the complexity of the issues. The U.K.'s FTSE 100 index dropped 0.4%.

While U.S. bond markets will be closed Monday for Columbus Day, stock trading will resume, though likely with lower volumes than normal.

Write to Caitlin Ostroff at [e-mail] and Joanne Chiu at [e-mail]

(END) Dow Jones Newswires

October 14, 2019 09:00 ET (13:00 GMT)

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