Stocks Decline on Tariffs; Yen Rises After Kuroda: Markets Wrap

Asian stocks built on losses in the U.S. on rekindled concerns about what a potential trade war and a more hawkish Federal Reserve could do to global economic growth. The yen jumped after Bank of Japan Governor Haruhiko Kuroda discussed the timing of a possible exit from its stimulus policy.

Japan bore the brunt of declines, with the Topix Index extending losses after Kuroda’s comments. Shares in Hong Kong, China, Australia and South Korea were also weaker after U.S. stocks posted a third day of declines. U.S. President Donald Trump promised to impose substantial tariffs on foreign metals and European Commission President Jean-Claude Juncker said Europe will respond “firmly” to any new tariffs. Treasuries retreated and German bunds climbed. The dollar steadied.

“We’re entering a period of turbulence,” Sebastien Page, head of asset allocation at T. Rowe Price, told Bloomberg TV from Baltimore. “So at the margin we are taking away from equities, adding both bonds and cash.”

The Cboe Volatility Index is up 35 percent this week as Fed chair Jerome Powell opened the door to speculation that the central bank may quicken the pace of monetary tightening, a move investors worry could derail economic growth. In his Senate testimony Thursday, he called for gradual interest rate hikes and said the economy wasn’t overheating.

Courtesy : Boomberg