By Caitlin Ostroff
Global stocks retreated Wednesday as trade talks between the U.S. and China appeared to near an impasse, with President Trump threatening to raise tariffs further.
Futures tied to the Dow Jones Industrial Average receded 0.3%, while the Shanghai Composite Index ended the day down 0.8%. Investors are growing concerned that relations between the world's two biggest economies may be further strained after the U.S. Senate passed a bill in support of Hong Kong's antigovernment protesters.
The bill would require the U.S. Secretary of State to certify annually that Hong Kong remained sufficiently independent from Beijing to warrant the special status that has helped the city grow into a global financial hub. China's Foreign Ministry said the act was a violation of international law, while Hong Kong officials said foreign legislatures shouldn't interfere with its internal affairs.
"The Chinese aren't very happy about that bill progressing," said Paul Flood, multiasset portfolio manager at Newton Investment Management. "It does make the tariffs discussion more difficult."
A breakdown in the trade talks would derail the White House's plans for a limited "phase one" agreement this year. Investors are also growing concerned that fresh tariffs on Chinese products including smartphones and toys may be put into effect Dec. 15, directly hitting American consumers. Mr. Trump said in a Tuesday cabinet meeting that China needs to make a deal he likes to avoid levies going even higher.
Ahead of the opening bell, Urban Outfitters dropped 15% after the retailer's third-quarter profit declined. Shares in Target climbed about 10% in premarket trading after the retail chain posted another quarter of rising sales. Lowe's jumped 4.6% after the home-improvement retailer raised its profit forecast and disclosed plans to shut some Canadian stores.
U.S.-traded securities in Pinduoduo, which competes with Alibaba Group Holding, declined 23% after the Chinese e-commerce company posted a third-quarter loss.
Meanwhile, the pan-continental Stoxx Europe 600 index fell 0.5%, led by declines in almost every sector.
Investors reached for haven assets, sending the yield on 10-year Treasurys to 1.745% Wednesday from 1.785% Tuesday. Bond yields across Europe also fell, with the German 10-year bund yielding minus 0.368%, from minus 0.337% Tuesday.
In the U.K., the pound fell 0.2% against the dollar after fresh opinion polls suggested that British voters are divided over whether Prime Minister Boris Johnson or Labour Party leader Jeremy Corbyn won the first television debate Tuesday night in the run up to the general election. The FTSE 250 index, which tracks companies with significant domestic operations, slumped 0.5%.
Later today, the Federal Reserve will issue its October policy meeting's minutes, which may offer further clues about the direction of future policy.
Write to Caitlin Ostroff at email@example.com
(END) Dow Jones Newswires
November 20, 2019 08:59 ET (13:59 GMT)
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