Global stocks extended losses Wednesday while government bond yields in the U.S., U.K. and Japan hit record lows as a rebound following the U.K.’s vote to exit the European Union continued to unravel.
The declines left the Dow Jones Industrial Average and S&P 500 headed for a second consecutive day of losses, unwinding some of their biggest weekly gain of the year, as economic concerns overseas added to investor worries ahead of the release of minutes from the Federal Reserve’s June meeting and Friday’s jobs report.
The benchmark 10-year Treasury note touched a fresh low of 1.321%, dragging on financial shares, ahead of Wednesday’s 2 p.m. EDT release of minutes from the Fed’s June meeting. Officials left interest rates unchanged and investors are seeking indications about their views of the economy and the impact of the U.K. referendum.
Outside the U.K., “if global growth were accelerating, Brexit would be pretty much a non-issue,” said John Canally, strategist at LPL Financial. “But because we’re in a slow growth mode, Brexit has the potential to knock it off track,” he said.
The Dow Jones Industrial Average fell 61 points, or 0.4%, to 17773. The S&P 500 declined 0.4%, while the Nasdaq Composite Index lost 0.3%.
The U.S. declines follow a 1.7% drop in the Stoxx Europe 600 and 1.9% drop in Japan’s Nikkei Stock Average.
Recent falls in European bank shares and a spate of U.K. property fund suspensions have exacerbated uncertainty following Britain’s June 23 referendum, puncturing a fragile recovery in risky assets such as stocks and oil.
On Wednesday, U.S. crude oil was little changed at $46.61 a barrel. The British pound fell 0.3% to $1.2918, while shares in Deutsche Bank and Credit Suisse fell to new lows.
As investors sought havens, the yield on Japan’s 20-year government bond fell below zero for the first time ever. The yield on 10-year gilts hit 0.732%, also a record. Yields move inversely to prices.
Gold climbed to a two-year high and last traded at $1,369.40 an ounce.
In other currencies, China’s authorities guided the yuan to its weakest level in almost six years. The yen, which tends to gain in times of market stress, rose to its highest level against the pound since the referendum. The dollar was last down 0.4% against the yen at ¥100.9040.
The stronger yen dragged down stocks in Japan while stocks in Australia and Hong Kong also finished with losses.
The Shanghai Composite Index, however, advanced 0.4%, led by gains in consumer staples.
