Cryptocurrencies continue decline following weekend wipeout
by Andre Janse van Vuuren and Macarena Muñoz
Global equities fell after China upped the ante in its trade dispute with the US, stirring fresh concerns over tensions between Beijing and Washington at a time when stocks look stretched after a relentless rally.
Contracts for the S&P 500 retreated 0.7% and Nasdaq 100 futures dropped 1% as China placed limits on five US entities tied to one of South Korea’s biggest shipbuilders and threatened further retaliation. MSCI’s Asia index declined for a third day — its longest losing streak since August — while European stocks slipped 0.5%.
Tuesday’s moves mark a third day of market swings, with fears of an escalation in US–China tensions returning to the forefront. The S&P 500 has gained more than 30% since its April low, as initial trade concerns gave way to unrelenting optimism over artificial intelligence and the resumption of US interest-rate cuts.
The yen was the top performer among major currencies as Japan’s opposition parties weighed a bid to unseat the long-ruling Liberal Democratic Party. The Nikkei 225 dropped as much as 3.2%, while short-term yields fell on reduced chances of a near-term rate hike. Gold fluctuated, while silver dipped after hitting a record high.
Investors’ attention is also turning to the unofficial start of earnings season, with JPMorgan Chase & Co., Goldman Sachs Group Inc., and Citigroup Inc. set to report before the US open. This season, investors will be looking for reassurance on everything from the durability of AI spending to the fallout of elevated tariffs.
“The China trade escalation has clearly rattled markets,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers. “With elevated valuations already making markets vulnerable, expect continued volatility ahead.”
Elsewhere, cryptocurrencies extended their declines after a wave of historic liquidations sparked a sharp weekend selloff.
Bitcoin, the largest token by market value, fell as much as 3.75% to around $111,500, while Ether dropped 7.5% to below $4,000. Smaller, more volatile tokens fell even further, wiping out more than $150 billion from the total cryptocurrency market value in 24 hours, according to CoinGecko data.
Brent crude fell toward $62 a barrel, extending its year-to-date decline to more than 16%, after the International Energy Agency said the record oil glut will be larger than previously estimated.
What Bloomberg strategists say...
“At a time when just about every corner of the market is awash in frothy valuations, the latest tensions give traders a reason to take some money off the table. Equity market complacency is writ large in volatility pricing as well, with the VIX Index looking abysmally low in relation to what the rest of this quarter may bring.”
— Ven Ram, Macro Strategist. For the full analysis, click here.
Corporate News:
- Michelin shares fell after the tiremaker lowered its financial guidance for the year following a bigger-than-expected sales slump in North America.
- BP Plc said a weak oil trading performance hit the company’s profit while production increased for a second straight quarter.
- Samsung Electronics Co. reported its biggest quarterly profit in more than three years in a sign of healthy AI chip demand, though investors hoping for outsized numbers cashed in some of the company’s recent stock market gains.
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 fell 0.5% as of 9:37 a.m. London time
- S&P 500 futures fell 0.7%
- Nasdaq 100 futures fell 1%
- Futures on the Dow Jones Industrial Average fell 0.5%
- The MSCI Asia Pacific Index fell 1.4%
- The MSCI Emerging Markets Index fell 1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.1% to $1.1556
- The Japanese yen rose 0.2% to 152.02 per dollar
- The offshore yuan fell 0.1% to 7.1476 per dollar
- The British pound fell 0.5% to $1.3269
Cryptocurrencies
- Bitcoin fell 3.2% to $112,119.04
- Ether fell 6.7% to $4,002.46
Bonds
- The yield on 10-year Treasuries declined two basis points to 4.01%
- Germany’s 10-year yield declined four basis points to 2.60%
- Britain’s 10-year yield declined five basis points to 4.61%
Commodities
- Brent crude fell 1.8% to $62.17 a barrel
- Spot gold rose 0.7% to $4,139.73 an ounce
This story was produced with the assistance of Bloomberg Automation.
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