U.S.-China Trade Standoff Weighs on Global Shares
18 June 2018 - 1:42PM
Dow Jones News
By Georgi Kantchev
Global stocks fell at the start of the week, as escalating trade
tensions between the U.S. and China weighed on investors' risk
appetite.
The Stoxx Europe 600 was down 0.8% in early European trade,
pulled lower by stocks in Germany and France. That followed a
downbeat session in Asia.
Futures pointed to opening losses of 0.5% for the S&P 500
and 0.6% for the Dow Jones Industrial Average.
President Donald Trump approved tariffs of 25% on about $50
billion of Chinese goods on Friday, prompting Chinese officials to
hit back by announcing the country would levy penalties of the same
rate on U.S. goods of the same value.
The moves exacerbate concerns among investors that the world's
two biggest economies could descend into a trade war. Rising
frictions in international trade in recent months have already
instilled uncertainty in global markets, which are experiencing one
of their most volatile stretches in years.
Concerns about the fate of the North American Free Trade
Agreement and tariffs that the Trump administration imposed on
European allies are also adding to investor anxiety.
"Trade continues to weigh on the market and the China tariffs
are a big deal," said Lindsey Bell, investment strategist at CFRA
Research. "It could get worse before it gets better."
Market watchers still expect the U.S. and China to continue
talking, and so far the repercussions for global growth are seen as
limited. Analysts at Deutsche Bank estimate the impact of the
announced U.S. tariffs on China's economy would be less than 0.1%
of China's gross domestic product this year.
However, if the U.S. imposes further tariffs as Mr. Trump has
already threatened, the impact would rise to 0.3%, according to the
bank.
The 10-year U.S. Treasury yield fell to 2.915% from 2.926%.
Yields move inversely to prices. The WSJ Dollar Index, which tracks
the dollar against a basket of 16 currencies, was broadly flat.
Investors this week are also looking to central bankers for
further guidance on monetary policy after the Federal Reserve and
the European Central Bank both held meetings last week.
The ECB, which signaled that interest rates would likely remain
unchanged at least through the summer of 2019, is holding an event
in Sintra, Portugal. The Bank of England is meeting on
Thursday.
In Asia, Japan's Nikkei Stock Average finished down 0.8% while
South Korea's Kospi shed 1.2%. Bourses in China and Hong Kong were
closed for holidays.
In commodities, Brent crude, the global oil price benchmark, was
up 0.9% as investors awaited a key producer meeting between the
Organization of the Petroleum Exporting Countries and other major
suppliers later this week. Gold was up 0.4%.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
(END) Dow Jones Newswires
June 18, 2018 08:27 ET (12:27 GMT)
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