Global stocks falter as trade war fears deepen
AFP – World stock markets faltered Monday as traders eyed looming trade wars and worried about EU rifts over migration.
Analysts said investors were still jittery following Friday’s tit-for-tat tariff announcements by the US and China. Markets fear a further escalation could derail the global economy.
"Trade concerns are the bulk of the issue here," said Nate Thooft, based in Boston for Manulife Asset Management, adding that shares would be down more if people sensed a genuine crisis.
"Investors are looking through this situation by saying, ‘This is not really a trade war but maybe a trade battle’ as the dollar amounts we are talking amount are pretty small in the grand scheme of the volume of trade that occurs between these major nations."
The Dow and S&P 500 both dropped, although both finished above their session lows. The Nasdaq ended flat after opening sharply down.
– Frankfurt, Buenos Aires fall –
European equities were also down, with Frankfurt slumping 1.4 percent and investors rattled over a debate on migrant policy.
A defiant Interior Minister Horst Seehofer warned that he would give Chancellor Angela Merkel a fortnight to find a European deal to curb new arrivals by a June 28-29 EU summit, failing which he vowed to order border police to turn back migrants.
Merkel immediately rejected the threat, saying there would be "no automatism" if no European deal was found and warned Seehofer and his Bavarian CSU party that she is ultimately in charge of government policy.
Merkel is due to meet with French President Emmanuel Macron on Tuesday. Merkel and Macron both agree on the need for a Europe-wide response to migrants and are hoping to hammer out a policy acceptable to all member states that would ease the burden on Italy, Greece and other main entry points.
In Argentina, the Merval Index in Buenos Aires dropped 8.3 percent after President Mauricio Macri fired Energy Minister Juan Jose Aranguren and Production Minister Francisco Cabrera in a surprise move over the weekend.
The stock market drop comes on the eve of a "Super Tuesday," the date when Central Bank’s debt — equivalent to nearly one third of its reserves — is renewed.
If investors do not renew the debt, there is likely to be an increased demand for the US greenbacks, making the peso less valuable.
Tokyo earlier closed down almost one percent, while Shanghai and Hong Kong were closed.
Brent crude meanwhile rebounded after slumping last week, as investors fret over Russia and Saudi Arabia’s expected agreement to ramp up output at an OPEC meeting that starts Friday.
The two major producers have kept a ceiling in place since late 2016, which has helped ease a supply glut and lift prices from multi-year lows.
– Key figures around 2100 GMT –
New York – Dow Jones: DOWN 0.4 percent at 24,987.47 (close)
New York – S&P 500: DOWN 0.2 percent at 2,773.87 (close)
New York – Nasdaq: FLAT at 7,747.03 (close)
London – FTSE 100: FLAT at 7,631.33 (close)
Frankfurt – DAX 30: DOWN 1.4 percent at 12,834.11 (close)
Paris – CAC 40: DOWN 0.9 percent at 5,450.48 (close)
EURO STOXX 50: DOWN 1.1 percent at 3,467.48 (close)
Tokyo – Nikkei 225: DOWN 0.8 percent at 22,680.33 (close)
Hong Kong – Hang Seng: Closed for a public holiday
Shanghai – Composite: Closed for a public holiday
Euro/dollar: UP at $1.1615 from $1.1610 at 2100 GMT on Friday
Pound/dollar: DOWN at $1.3243 from $1.3278
Dollar/yen: DOWN at 110.56 yen from 110.66 yen
Oil – Brent Crude: UP $1.90 at $75.34 per barrel
Oil – West Texas Intermediate: UP 79 cents at $65.85