Home / International/ Stocks, euro rise as shots fired in US-China trade war

Stocks, euro rise as shots fired in US-China trade war


Comments / {{hitsCtrl.values.hits}} Views / Saturday, 7 July 2018 04:19


 

LONDON (Reuters): The imposition of tariffs by the United States and China on billions of dollars of trade was absorbed calmly by markets on Friday with stocks edging higher and the euro climbing a three-week peak, but concerns about the conflict escalating capped gains.

Chinese shares led a recovery by Asian market, partly helped by the perception that the tariff measures were already priced in though worries about what lay ahead for global markets boosted appetite for perceived safe-haven assets such as government debt and the Japanese yen.

 “Some of it is priced in but then this is an ongoing story and what can definitively be said that we are entering a period of much greater uncertainty than before,” said Neil Mellor, a senior currency strategist at BNY Mellon in London.

World stocks rose 0.2% to their highest level in a week while Asian stocks climbed nearly half a% led by a rebound in Chinese shares.

US tariffs on more than 800 goods from China worth $34 billion took effect at 0401 GMT while China’s commerce ministry said in a statement shortly after the deadline passed that it was forced to retaliate, meaning $34 billion worth of imported U.S. goods including autos and agricultural products also faced 25% tariffs.

MSCI’s main European Index edged 0.1% higher and held below a two-week high hit in the previous session amid hopes of a rapprochement between the U.S. and Europe on auto trade tariffs.

The euro took cues from broadly firmer stocks and rose 0.1% on the day to a fresh three-week high at $1.1727 with broadly strong German industrial data this week also boosting demand for European stocks.

To be sure, signs of nervousness were evident in markets with the Japanese yen and the Swiss franc firm against the dollar while core U.S. and German bonds in demand.

“The China-U.S. relationship is such a large component of global trade that we really have a global impact and that has implications that are difficult to foresee,” said Frederic Neumann, co-head of Asia economic research at HSBC in Hong Kong.

U.S. President Donald Trump has warned the United States may ultimately target over $500 billion worth of Chinese goods, an amount that roughly matches its total imports from China last year.

Copper, seen as a barometer of the world’s economic strength because of its wide industrial use, on Friday fell to near a one-year low, at $6,221.50 per ton, before recouping some losses.

In the currency market, the Chinese yuan weakened after choppy trade, keeping some distance from 11-month lows touched earlier this week.

The two-year U.S. Treasury yield, which rises with traders’ expectations of higher Fed fund rates, was at 2.553% compared with a U.S. close of 2.561%.

U.S. crude stood 0.2% higher at $73.09 a barrel. Brent crude was almost flat at $77.42 per barrel.

For Reuters Live Markets blog on European and UK stock markets open a news window on Reuters Eikon by pressing F9 and type in ‘Live Markets’ in the search bar.


Share This Article


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

Bright star Imran Khan could well go the way of his predecessors

Saturday, 21 July 2018

Imran Khan, the Pakistani cricket star, anti-corruption crusader and politician, appears to be within reach of his cherished goal of winning the 25 July Pakistan National Assembly (NA) elections and becoming Prime Minister.


Top Cola brand crashing globally; lesson for Sri Lanka

Friday, 20 July 2018

We have heard the age old adage, if a brand is not in line to the trends of a customer, they will cease to exist over time.


Religion and politics: a tale of two hypocrisies

Friday, 20 July 2018

It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief,


Sri Lanka’s Trade Information Portal – Bringing local traders one step closer to the global market

Friday, 20 July 2018

Sri Lanka’s traditional lacework famously known as Beeralu is slowly moving into the spotlight of the global fashion industry


Columnists More