Wall Street fell sharply on Thursday, extending a broad and deep sell-off across global stock markets as concern about the potential impact of the deepening trade dispute between the US and China took a tighter grip on sentiment.
The slide in US equities coincided with a brisk rally in Treasuries, pushing yields to their lowest level since 2017.
The S&P 500 dropped 1.2 per cent, with the tech-heavy Nasdaq Composite down 1.6 per cent. Sectors with the most direct exposure to the latest round of tension, which was particularly focused on technology stocks, led the declines.
Shares in Apple fell by 1.7 per cent, with Qualcomm down 1.5 per cent. The Philadelphia Semiconductor index lost 1.7 per cent, with every one of its constituents in the red.
Energy shares led the retreat, amid a steep decline in oil prices driven by higher US inventories and concerns that lingering US-China trade tensions will weigh on fuel demand.
Meanwhile the utilities sector, seen as a defensive play and a proxy for bonds, rose to a fresh all-time high.
Political uncertainty stemming from Brexit fears weighed on the FTSE 100 index, as UK voters headed to the polls for the European Parliament elections. The London benchmark closed 1.4 per cent down, dragged lower by Royal Mail, which plummeted more 10 per cent to end the day at 197.90p.
Frankfurt’s Xetra Dax 30 lost 1.8 per cent. The Europe-wide Stoxx 600 fell back towards the two-month lows it touched earlier in May, losing 1.4 per cent.
The Stoxx index tracking the tech sector fell by 2.5 per cent. The equivalent benchmark for the region’s carmakers, which investors fear could also get caught in the tariff battle, fell by 3 per cent.
Smartphone component makers were among the biggest fallers in Asia. Sunny Optical Technology and AAC Technologies were down by almost 8 per cent and over 6 per cent, respectively. On Wednesday, it was widely reported that Chinese surveillance firm Hikvision may be included in a US blacklist, building on restrictions issued against Huawei last week.
China’s benchmark CSI 300 fell 1.8 per cent overall. The MSCI index tracking Asian equities outside Japan fell to some of its lowest levels in four months.
Haven assets rallied. The yield on the 10-year US Treasury note fell 8.1 basis points to 2.3115 per cent as investors bought into the debt. Japan’s yen strengthened by 0.7 per cent to ¥109.53 per dollar. Gold rose 0.8 per cent to its highest level in about a week.
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