Global stocks wobble as trade war worries deepen
AFP – Stock markets were uneasy and the dollar fell Monday as investors girded for another round of US tariffs imposed on Chinese goods.
Traders had late last week welcomed US Treasury Secretary Steven Mnuchin’s offer to meet officials from Beijing to avert an all-out trade war.
But US President Donald Trump seemed set to ratchet up pressure on China, saying an announcement was imminent, and promising action that will produce "a lot of money coming into the coffers."
He was apparently referring to plans discussed earlier by White House economic advisor Larry Kudlow on the looming imposition of tariffs on another $200 billion of Chinese imports.
China has vowed to retaliate against any new tariffs by the United States, raising worries among investors of an all-out trade war.
US stocks, already negative most of the day, fell further after Trump’s remarks, with the Dow shedding 0.4 percent and Nasdaq 1.4 percent.
"The ongoing conflict between the US and China continues to be a primary driver of market sentiment, with investors concerned about the prospect of a full blown trade war as neither side shows a willingness to blink," said Craig Erlam, senior market analyst at Oanda trading group.
Hong Kong’s stock market led losses Monday, while the main European indices were lukewarm.
– ‘Best of a bad situation’ –
While investors are in a selling mood, some positives could be taken from reports that Trump was considering 10 percent tariffs instead of the feared 25 percent, said JP Morgan Asset Management global market strategist Kerry Craig.
"Timing is also important when it comes to enacting any new tariffs. A staggered implementation is being viewed as the best of a bad situation," Craig added.
Elsewhere on foreign exchange Monday, emerging market currencies continue to struggle as investors fret over a possible spillover from financial crises in Argentina, Turkey, and South Africa.
"Equities in emerging Asia have been hit harder than those in the rest of the world today as last week’s small recovery has come to a swift end. We would not be surprised if they continued to underperform," Capital Economics analysts said in a note.
Meanwhile, the pound held up as uncertainty over Brexit loomed large, with British Prime Minister Theresa May warning that her plan is the only alternative to crashing out of the European Union without an agreement.
May’s statement came as the International Monetary Fund cautioned that Britain’s economy would suffer "substantial costs" should it depart the EU in March with no divorce deal.
The dollar fell against the euro and other major currencies in the wake of the US tariff headlines, which come on the heels of some muted US economic data, said Kathy Lien of BK Asset Management.
"With consumer spending and inflation also weakening, the Federal Reserve may choose to forgo a hike in December after tightening" in September, Lien said.
– Key figures around 2040 GMT –
New York – Dow Jones: DOWN 0.4 percent at 26,062.12 (close)
New York – S&P 500: DOWN 0.6 percent at 2,888.80 (close)
New York – Nasdaq: DOWN 1.4 percent at 7,895.79 (close)
London – FTSE 100: FLAT at 7,302.10 (close)
Frankfurt – DAX 30: DOWN 0.2 percent at 12,096.41 (close)
Paris – CAC 40: DOWN 0.1 percent at 5,348.87 (close)
EURO STOXX 50: FLAT at 3,346.11 (close)
Hong Kong – Hang Seng: DOWN 1.3 percent at 26,932.85 (close)
Shanghai – Composite: DOWN 1.1 percent at 2,651.79 (close)
Tokyo – Nikkei 225: Closed for a public holiday
Euro/dollar: UP at $1.1685 from $1.1625 at 2100 GMT on Friday
Pound/dollar: UP at $1.3159 from $1.3068
Dollar/yen: DOWN at 111.83 yen from 112.06 yen
Oil – Brent Crude: DOWN 4 cents at $78.05 per barrel
Oil – West Texas Intermediate: DOWN 8 cents at $68.91 per barrel