Added to this was the fear that great britain could actually leave the european union without an agreement. Investors divested themselves of technology stocks in particular. They are considered particularly susceptible to economic fluctuations.
The leading dow jones industrial index sank 3.10 percent to 25.027.07 points off. It was the biggest slide since the 10-year. October. At the beginning of the week, the stock market had reacted with relief to the fact that starting in january, planned U.S. Tariffs on chinese goods worth 200 billion dollars will be suspended for an initial period of 90 days.
For the market broad S&P 500 it went down on tuesday by 3.24 percent to 2700.06 points. The technology index nasdaq 100 slumped 3.78 percent to 6795.21 points.
US president donald trump and china’s state president xi jinping had agreed over the weekend not to escalate the trade conflict any further for the time being. "All the two sides really needed to do was agree on the parameters for a future deal and what needed to be included in order to extend the peace of the burg as well as move forward with the removal of the tariffs," wrote analyst craig erlam of the truth broker oanda. Currently, however, as his colleague stephen innes sees it, confusion reigns after trump’s advisor larry kudlow had difficulty clearly formulating when exactly china intends to withdraw tariffs on U.S. Cars.
Investors were also hit by bad news from london: just hours before the start of the five-day debate on the brexit agreement, the british parliament had handed the government a severe defeat. The deputies decided that the government had disregarded the rights of parliament. For prime minister theresa may, this is a further setback. In any case, it is seen as having little chance of securing a majority for its agreement at the scheduled vote on 11. December in parliament.
Investors also looked nervously at the bond market. For the first time in about eleven years, yields on three-year and two-year U.S. Bonds there were higher than yields on five-year maturities. Such a structure with higher short-term than long-term interest rates is an unusual phenomenon and is considered a recession signal.
The shares of construction equipment manufacturer caterpillar, which are sensitive to the economy, were the worst performer in the dow, falling by around 7 percent. Shares in apple fell by more than 4 percent. The british investment bank HSBC had removed its buy recommendation for the iphone manufacturer’s shares due to a lack of short-term price drivers. All other dow stocks also closed in the red.
The dollar general department store chain had lowered its target for annual earnings per share, missing the average analyst estimate and sending its shares down nearly 7 percent.
A skeptical analyst study sent the shares of logistics groups fedex and UPS on a downward slide: they lost a good 6 and more than 7 percent respectively. Investors underestimated the competitive risks posed by the entry of online retailer amazon into the freight business, it was claimed.
This wednesday, meanwhile, wall street and nasdaq will be closed in memory of the 30. November late ex-president george H. W. Bush, 41. President of the USA, will remain closed.
The euro was last quoted at 1.1342 U.S. Dollars. The european central bank had set the reference rate at 1.1409 (monday: 1.1332) dollars. The dollar was worth 0.8765 (0.8825) euros. Directional ten-year u.S. Government bonds gained 16/32 points to 101 27/32 points and yielded 2.910 percent.
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