US stocks retreat in bank sell-off, oil slump

Financial markets remained volatile on bets that the trade truce between China and the US won’t last after the arrest of Huawei’s chief financial officer.

Bank shares in the S&P 500 fell about 2.5 per cent, as Treasury yields slid to the lowest since August. Traders have started to doubt the Federal Reserve will raise rates even once next year as economic growth falters.

Oil continued to be a drag on financial markets, with West Texas Intermediate back to $US51 a barrel as OPEC ministers seek a deal to cut output. Energy producers in the S&P 500 sank more than 3 per cent, and emerging-market equities plunged.

Some of the main market moves:

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“The biggest qualm is the trade war escalating and this is haunting the markets,” said Naeem Aslam, chief market analyst at Think Markets UK in London, in an email. “It is arduous to find bulls in the market and it seems to me that this game is about to become uglier.”

Traders pointed to a spate of other catalysts for the renewed risk-off tone that’s gripping financial markets. Bank of Japan governor Haruhiko Kuroda said economic risks from abroad could be severe, and the Federal Reserve’s Beige Book report showed fading optimism over growth prospects at US firms even as most districts continued to report a modest expansion. The pound drifted as UK Prime Minister Theresa May searched for a compromise to avoid a crushing defeat on her Brexit deal in a key vote in parliament next week.

“There are so many forces weighing against markets right now, whether it’s the China slowdown, weak European data, Fed hikes, uncertainty around trade and now Brexit as well,” Bilal Hafeez, head of fixed-income research for EMEA at Nomura, told Bloomberg TV. “We really need to see

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