As
investors brace for another escalation in a trade war between the
United States and China, World shares recorded a fall for the fifth
straight day on Thursday.
investors brace for another escalation in a trade war between the
United States and China, World shares recorded a fall for the fifth
straight day on Thursday.
Reuters reports that Emerging market (EM) currencies also paused near 15-month lows.
The
MSCI All-Country World Index, which tracks shares in 47 countries, was
down 0.2 per cent. Stocks in Europe opened lower, with the pan-European
STOXX 600
index as much as 0.4 per cent down.
MSCI All-Country World Index, which tracks shares in 47 countries, was
down 0.2 per cent. Stocks in Europe opened lower, with the pan-European
STOXX 600
index as much as 0.4 per cent down.
The
main worry for investors was the end of a public consultation period on
Thursday for U.S. President Donald Trump’s plan to impose tariffs on an
additional
$200 billion of Chinese goods.
main worry for investors was the end of a public consultation period on
Thursday for U.S. President Donald Trump’s plan to impose tariffs on an
additional
$200 billion of Chinese goods.
Trump said on Wednesday trade talks with China would continue but the United States was not yet ready to come to an agreement.
“Unlike
the last few days, where there has at least been a wave of PMI
(purchasing manager indexes) to deal with, Thursday has little in the
way of distraction
for the European markets, meaning investors are just going to have to
sit and stew in this particularly unpleasant trading broth,” said Connor
Campbell, an analyst at Spreadex.
the last few days, where there has at least been a wave of PMI
(purchasing manager indexes) to deal with, Thursday has little in the
way of distraction
for the European markets, meaning investors are just going to have to
sit and stew in this particularly unpleasant trading broth,” said Connor
Campbell, an analyst at Spreadex.
Earlier
in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan
dropped more than 1 percent to a one-year trough of 515.24 points. It
was last down
0.8 percent.
in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan
dropped more than 1 percent to a one-year trough of 515.24 points. It
was last down
0.8 percent.
Japan’s
Nikkei slipped 0.4 percent and Australian shares dropped 1.1 percent.
China’s blue-chip index fell 1.1 percent, Hong Kong’s Hang Seng index 1
percent.
Nikkei slipped 0.4 percent and Australian shares dropped 1.1 percent.
China’s blue-chip index fell 1.1 percent, Hong Kong’s Hang Seng index 1
percent.
Further
weighing on sentiment, data out earlier showed German industrial orders
fell unexpectedly in July, another sign that factories in Europe’s
largest economy
are feeling the bite of protectionist trade politics.
weighing on sentiment, data out earlier showed German industrial orders
fell unexpectedly in July, another sign that factories in Europe’s
largest economy
are feeling the bite of protectionist trade politics.
Investors
are also watching for developments as the United States and Canada
resume talks about revamping the North American Free Trade Agreement.
Canada insisted
there was room to salvage the pact despite few signs a deal was
imminent.
are also watching for developments as the United States and Canada
resume talks about revamping the North American Free Trade Agreement.
Canada insisted
there was room to salvage the pact despite few signs a deal was
imminent.
The
dollar, considered a safe haven at times of turmoil because of its
status as the world’s reserve currency, has generally benefited from the
trade conflicts.
It has gained 8 percent since the end of March, with currencies in
emerging markets taking a hammering.
dollar, considered a safe haven at times of turmoil because of its
status as the world’s reserve currency, has generally benefited from the
trade conflicts.
It has gained 8 percent since the end of March, with currencies in
emerging markets taking a hammering.
But
measured against a basket of currencies, the dollar retreated from the
two-week highs it reached earlier this week to stand 0.1 percent lower
at 95.07.
measured against a basket of currencies, the dollar retreated from the
two-week highs it reached earlier this week to stand 0.1 percent lower
at 95.07.
The euro was a tad stronger at $1.1636.
Sterling
held on to gains made on Wednesday as investors positioned for a
favorable Brexit outcome. It was last up 0.1 percent at $1.2910.
held on to gains made on Wednesday as investors positioned for a
favorable Brexit outcome. It was last up 0.1 percent at $1.2910.
Emerging
markets have been hit by the financial crises in Argentina and Turkey.
In Indonesia’s central bank has had to intervene several times in recent
weeks
to stem the rupiah’s slide.
markets have been hit by the financial crises in Argentina and Turkey.
In Indonesia’s central bank has had to intervene several times in recent
weeks
to stem the rupiah’s slide.
Indonesia’s benchmark stock index was last up nearly 1 percent while the rupiah also gained a tad.
MSCI’s
index of emerging market currencies, which had earlier paused near
15-month lows, was up 0.1 percent on the day after two straight days of
heavy declines.
index of emerging market currencies, which had earlier paused near
15-month lows, was up 0.1 percent on the day after two straight days of
heavy declines.
But
analysts warned about further losses because investors were no longer
looking at Argentina, Turkey and South Africa as isolated cases. They
were fretting
over the impact of rising U.S. inflation and interest rates on heavily
indebted economies.
analysts warned about further losses because investors were no longer
looking at Argentina, Turkey and South Africa as isolated cases. They
were fretting
over the impact of rising U.S. inflation and interest rates on heavily
indebted economies.
“As
global monetary conditions slowly tighten, the global economic cycle
rolls over and the U.S. President disturbs the global trade cycle,
there’s definitely
more to the EM sell-off than a few unrelated spots of weakness,” wrote
strategists at Societe Generale in a note to clients.
global monetary conditions slowly tighten, the global economic cycle
rolls over and the U.S. President disturbs the global trade cycle,
there’s definitely
more to the EM sell-off than a few unrelated spots of weakness,” wrote
strategists at Societe Generale in a note to clients.
The
emerging market equity index has been crunched in the past month or so,
falling for six consecutive sessions and down more than 3 percent this
week.
emerging market equity index has been crunched in the past month or so,
falling for six consecutive sessions and down more than 3 percent this
week.
A
range of factors have hit the stocks: policy tightening by the U.S.
Federal Reserve, the crises in Turkey and Argentina, the Sino-U.S. trade
war and broader
concerns about China’s economy.
range of factors have hit the stocks: policy tightening by the U.S.
Federal Reserve, the crises in Turkey and Argentina, the Sino-U.S. trade
war and broader
concerns about China’s economy.
“We
doubt that the main factors which have caused equities across much of
the emerging world to weaken together recently will go away just yet,”
Capital Economics
said in a note.
doubt that the main factors which have caused equities across much of
the emerging world to weaken together recently will go away just yet,”
Capital Economics
said in a note.
In
commodities, oil prices fell as emerging market woes weighed on
sentiment. U.S. crude eased 0.1 percent to $68.65 a barrel. Brent was
last down 0.1 percent
at $68.64.
commodities, oil prices fell as emerging market woes weighed on
sentiment. U.S. crude eased 0.1 percent to $68.65 a barrel. Brent was
last down 0.1 percent
at $68.64.
Gold was stronger with spot gold up half a percent at $1,202.15 an ounce.
