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By Herbert Lash
NEW YORK (Reuters) - Investors piled into gold, safe-haven yen and bonds on Monday over nagging concerns about a prolonged U.S.-China trade war and global growth, while Argentina's peso plunged 15% after voters handed its president an election mauling.
Graphic: Rising gold prices - https://tmsnrt.rs/2YD8nsu
The yen rose to its highest in more than a year and a half versus the dollar on the prospect the Japanese currency could gain more in the case of a drawn-out U.S.-Sino trade conflict.
Concerns that a trade deal would not be reached before the 2020 U.S. presidential election grew after Goldman Sachs on Sunday became the latest to cut its U.S. growth outlook and warn a trade stand-off would fester past the election.
Graphic: China trade shock interactive - https://tmsnrt.rs/2SRopIf
Stocks on Wall Street fell more than 1% to push a gauge of global equity performance down almost as much. Earlier in China stocks rallied more than 1% as the yuan avoided further drama after Chinese authorities allowed the yuan to slip below the seven-per-dollar level last week.
Stocks in the near term lack a catalyst either from company earnings, the Federal Reserve or a trade deal, said Rahul Shah, chief executive of Ideal Asset Management in New York.
"The promise of a trade deal coming this year, I think that's becoming less and less likely," Shah said. "That does set up the market possibly for a correction at this point," he said.
Stocks could dip between 5% to 10% but prompt long-term investors to enter the market as valuations fall, he said. Half of Shah's portfolio is corporate debt with the remainder tech stocks and shares with solid dividends, he said.
MSCI's gauge of stock performance in 47 countries fell 0.85%, driven lower by tumbling U.S. stocks. The benchmark S&P 500 index is now almost 5% off its all-time high set just 11 sessions ago.
The Dow Jones Industrial Average slipped 391 points, or 1.49%, to 25,896.44. The S&P 500 lost 35.96 points, or 1.23%, to 2,882.69 and the Nasdaq Composite dropped 95.73 points, or 1.2%, to 7,863.41.
European shares fell, with the pan-regional FTSEurofirst 300 of leading European shares closing down 0.31%, while Germany's export-heavy DAX off 0.12%.
Graphic: MSCI All Country World Index Market Cap - http://tmsnrt.rs/2EmTD6j
Germany's Ifo survey echoed the growth concerns with its measures for current conditions and economic expectations both having worsened in the third quarter.
Gold edged up, holding above the psychological $1,500 level. Spot gold added 1.1% to $1,512.51 an ounce.