The S&P 500 ended the week on a positive note on Friday, closing 0.5% higher. The index had been down as much as 1.1% intraday before a rebound in Healthcare, Consumer Staples and Technology stocks reversed the sell-off.
Initial equity market weakness was caused by the announcement of global tariffs on steel and aluminium imports into the US, increasing concerns of a global trade war.
In FX markets, the dollar was unnerved by the prospect of heightened trade war concerns, falling 0.9% against the euro to settle at $1.2317. US bond yields also ticked higher (prices fell), with the yield on 10-year issues rising 6bps to 2.87%.
European equity markets closed notably lower Friday as the session closed before the rebound in US stocks took hold. The Euro Stoxx 50 index fell 2.2%, the German DAX index lost 2.3% and the French CAC settled 2.4% lower.
The announcement of tariffs from the US government impacted the share prices of several European exporters – ThyssenKrupp (the German steelmaker) fell more than 4%; Rio Tinto (which exports aluminium to the US from Canada) fell 3.8%; and German carmakers were also unnerved by the potential for tariffs on autos (Volkswagen and Daimler both fell more than 2%).
The euro reversed some of Friday’s strong gain this morning as Italy’s anti-establishment groups performed well in Sunday’s election. Early results suggest a hung parliament and a period of protracted negotiations before a government is formed.
Asian equities fell on continued concern about the impact of American tariffs on the global economy. Japanese stocks fell 0.7%, with losses concentrated in the Materials sector.