Stocks Drop as the War Gloom Is Increased by the China Trade Probe – Europe Market Wrap

US markets were on track for their longest weekly losing streak since 2022 as traders became increasingly concerned about a protracted Middle East conflict, while China escalated its trade fight with the US. Bonds fell internationally.

S&P 500 futures fell 0.3%, putting the benchmark on track for its fifth weekly decrease. Brent increased 2.3% to more than $110 per barrel. Two-year Treasury yields rose three bps, to 4.01%. The Dollar and gold edged higher.

Traders are concerned about a broader impact on energy supplies and oil prices, fuelling fears of an inflationary cycle that might drive central banks to tighten monetary policy. China’s decision to launch a trade investigation against the US ahead of an expected summit between Trump and Xi weighed on morale as well.

European equities slumped 1.1%, with the Stoxx 600 poised for its worst month since the pandemic began. Yields on UK, German, and French government debt increased by four basis points or more across the curve. Asian stocks extended March’s losses by more than 10%.

Sentiment remained weak as Iran and Israel traded missile fire on Friday morning, with Tehran targeting several Gulf states. According to the Wall Street Journal, the Pentagon is considering sending an additional 10,000 ground troops to the Middle East.