Global Concerns Weigh in on US Indices, Wall Street
US stocks ended down on Tuesday but well off the day's lows, as worries about a host of burgeoning geopolitical risks dampened investor sentiment.
Tuesday, April 11, 2017 - 00:00
The Dow Jones Industrial Average fell 6.65 points, or 0.03 percent, to 20,651.37, the S&P 500 lost 3.37 points, or 0.14 percent, to 2,353.79 and the Nasdaq Composite dropped 14.15 points, or 0.24 percent, to 5,866.77. Seven of 11 sectors in the S&P 500 declined, with real estate related stocks the only sector that traded significantly higher. An earlier widespread drop sent the the CBOE Volatility Index, or VIX, to the highest level since just after the U.S. presidential election.
Gold and the yen rallied to five-month highs while Treasury note yields approached the lowest levels of the year as investors sought out traditional havens from geopolitical risks. The US equity market’s standard fear gauge rose to the highest since November.
The yen strengthened versus all of its G-10 peers as tensions in Asia ratcheted higher, with North Korea warning of a nuclear strike if provoked and President Donald Trump saying on Twitter that the US would “solve the problem” with or without China. US Secretary of State Rex Tillerson said during a Group of Seven Meeting in Italy that Russia must abandon its support of Syrian President Bashar al-Assad’s regime.
As the global macro picture gets muddied a bit by some strong words from North Korea and the president’s tweets, that’s spooked markets that were already in a bit of a risk-off tone to begin with.
Sovereign debt was the worst-performing among emerging market debt, but it’s not South Korea. The chief culprits were Venezuela and El Salvador. Venezuela’s state oil company has $2.1 billion of bonds maturing tomorrow. While the company said it would pay, investors are used to the risk that something could always go wrong. El Salvador tumbled after the government said it would miss $29 million of payments to pension-fund managers amid a political dispute.
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