By Sinéad Carew and Nell Mackenzie
NEW YORK/LONDON (Reuters) – MSCI’s global equities gauge was down 1.7% after earlier touching a near two-month low on Monday while U.S. bond yields dropped as investors worried about an economic slowdown after U.S. President Donald Trump did not rule out a tariff-related recession.
Investors started seeking safety as early as Sunday when Trump in a Fox News interview talked about a “period of transition” while declining to predict whether his tariffs on China, Canada and Mexico would result in a U.S. recession.
Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, cited concerns around tariffs including Trump’s interview as key factors behind Monday’s risk-off mood.
“When he says there’s going to be pain felt he’s telling you this may not be short term in nature. This may not be a negotiation tactic,” said Pavlik.
“Tariffs create a bunch of uncertainties around costs, inflation and economic growth. You don’t know the end game and you don’t know the goal,” he said. “How do you plan for that? How do you buy a stock for the future when you don’t know what the future holds?”
At 11:18 a.m. the S&P 500 was down 114.82 points, or 1.99%, to 5,655.38 and the Nasdaq Composite was 641.86 points, or 3.48%, lower at 17,562.91, with both hitting their lowest levels since September.
The Dow Jones Industrial Average fell 370.16 points, or 0.86%, to 42,431.56,
MSCI’s gauge of stocks across the globe fell 14.79 points, or 1.74%, to 837.31, hitting its lowest level since mid January.
The pan-European STOXX 600 index fell 0.99%, hitting its lowest level in a month.
Yields fell with U.S. government bonds in demand after the Trump interview cut into investor confidence.
“If the occupant in the White House is himself not terribly optimistic about short-term growth expectations, why should the market be optimistic about it?” said Will Compernolle, macro strategist at FHN Financial.
Heading for its biggest one-day drop in almost a month, the yield on benchmark U.S. 10-year notes fell 9.9 basis points to 4.219%, from 4.318% late on Friday.
The 30-year bond yield fell 8.7 basis points to 4.5299% while the 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 7.9 basis points to 3.923%.
In currencies, investors looked to Japan’s yen for safety with the U.S. dollar weakening 0.68% to 147.03 yen. The euro was down 0.04% at $1.0828 while sterling weakened 0.09% to $1.2909.
Oil prices sank on concern over the impact of U.S. tariffs and rising output from OPEC+ producers, although potential sanctions on Iranian oil exports kept prices from falling farther.
U.S. crude fell 0.75% to $66.54 a barrel and Brent fell to $69.81 per barrel, down 0.78%.
Gold prices dipped as profit-taking countered support from safe-haven demand, with focus also on the U.S. inflation print later this week.
Spot gold fell 0.31% to $2,901.73 an ounce. U.S. gold futures edged up 0.1% to $2,907.50 an ounce. Copper declined 0.76% to $9,540.00 a metric ton.
In cryptocurrencies, bitcoin fell 3.54% to $80,140.80.
The long-awaited U.S. executive order on creating a strategic reserve of cryptocurrencies came on Friday, but disappointed many investors by saying there would be no additional buying of bitcoin.
Earlier, data showed deflationary pressure in China as its February consumer price index missed expectations and fell at the sharpest pace in 13 months, while producer price deflation persisted, as seasonal demand faded and households remained cautious about spending amid job and income worries.
China’s blue-chip CSI300 Index closed 0.4% lower, while Hong Kong’s benchmark Hang Seng fell 1.9%.
(Reporting by Sinéad Carew, Nell Mackenzie and Kevin Buckland; Editing by Lincoln Feast, Kirsten Donovan and Andrew Heavens)
