US stocks plunged as a litany of global concerns wiped out a short-stage rally.
Trade-sensitive shares sank as angst mounted that the US and China made no meaningful progress on the trade front last weekend.
US financial shares got hammered as the yield curve continued to flatten, with the latest nudge from a hawkish comment by a US central bank official.
Losses accelerated and trading volumes in S&P 500 futures spiked after contracts for broke below their 200-day moving average. Adding to the risk aversion was news that British Prime Minister Theresa May’s push to avoid a hard Brexit is at risk.
The Iseq Overall Index dropped by 2.5%.
“Today’s move feels like the market is a scorned lover. It had believed, for whatever reason, that progress was being made at the G20 and that turns out to be murky — it feels lied to,” said Michael Antonelli, a managing director at Robert W Baird & Co. “Then a pile of negative Brexit news.”
Shares in Boeing, Caterpillar, and Apple helped push the Dow Jones Industrial Average lower, while banks were the worst performing sectors in the S&P 500, led by declines in Bank of America, JPMorgan, and Wells Fargo.
US Treasury secretary Steven Mnuchin and President Donald Trump’s top economic adviser, Larry Kudlow, dialled back expectations and added qualifiers when asked about the outcome of talks between Mr Trump and Chinese President Xi Jinping over the weekend.
Mr Kudlow said the White House doesn’t yet have a deal with China to reduce tariffs on US-made cars.
The statement was a reversal from a tweet by the president, who said over the weekend that “China has agreed to reduce and remove tariffs on cars coming into China from the US”.
Officials in Beijing declined to comment on the tweet and have not confirmed such an agreement. “Yes, there is a halt in tariffs,” said Delores Rubin, senior equities trader at Deutsche Bank Wealth Management. But “we haven’t resolved anything yet”, she said.
Meanwhile, the Irish Government received something of a boost in its efforts to oppose the introduction of a digital tax. Europe’s efforts to tax large tech companies were kept on life-support as France and Germany proposed a final-hour compromise that scales back the broad plan initially envisioned by Paris.