Home / International/ World shares driven towards worst week since March by trade tensions

World shares driven towards worst week since March by trade tensions

Comments / {{hitsCtrl.values.hits}} Views / Saturday, 8 September 2018 00:10


LONDON (Reuters): World shares limped toward their worst week in almost six months on Friday, with Asia carving out a 14-month trough as investors braced for a new salvo of Sino-US tariffs.

A slump in US chip stocks and reports that President Donald Trump had also weighed a trade scrap with Japan dragged on tech-heavy Asia overnight, while Europe’s main bourses faded after an initial attempt push higher.

A flat pan-European STOXX 600 was set to end the week with a 2.3% loss, its worst weekly performance since the end of March. Emerging market stocks have lost even more, some 3%.

Nerves were set to be frayed further after the public comment period for proposed tariffs on an additional $200 billion worth of Chinese imports passed at 0400 GMT. The tariffs could now go into effect at any moment, although there was no clear timetable.

China has warned of retaliation if Washington launches any new measures. Australia’s dollar, often used in as play on China’s fortunes due to its huge metals exports there, hit a 2-1/2 year low early on it Europe.

“It is all linked to the trade comment period expiring and now we are wondering what the implementation plan is going to be and how China is going to respond,” Saxo Bank’s head of FX strategy John Hardy said.

“The Aussie dollar of course is a proxy within G10 for that,” he added, also pointing to shares in mining giants such as BHP trading down near key technical levels.

There were some crumbs of comfort, however, for traders.

Battered emerging market shares were on course to snap a 7-day losing streak. China had closed higher overnight despite the tariff feud and Turkey’s lira and South Africa’s rand and Argentina’s peso all looked relatively calm early on.

Chinese blue chips had managed their 0.5% bounce as beaten-down health care stocks found buyers after taking a savaging in recent months amid vaccine scandals.

MSCI’s broadest index of Asia-Pacific shares outside Japan had still lost 0.3% though, having earlier reached its lowest since mid-July last year.

The Nikkei shed 0.8%, undermined by a rising yen and reports US President Donald Trump could be contemplating taking on Japan over trade.

Other emerging markets were trying to steady after a punishing week, with Indonesia and the Philippines still badly scarred by fears of capital flight following crises in Argentina and Turkey and the rumbling US-China trade strains.

“It seems unlikely the tariffs are not implemented as the US administration believes that they are winning the trade war and will be in a stronger position to negotiate if they put more pressure on China,” JPMorgan analysts wrote in a note.

“The tech sector was also very weak overnight, with a slide in Micron of almost 10% and further weakness in the Chinese Internet ADRs.”

Eyes were also turning to the US payrolls report for August which is expected to show a robust rise of 191,000, in part as July was temporarily depressed by the closure of the Toys R Us chain that month.

Still, analysts at NatWest Markets cautioned that: “Despite employment indicators pointing to another strong report, it is worth noting that there is a tendency for August payrolls to initially disappoint and then be revised up noticeably later.”

Just as important will be figures on US wages where a rise above the 0.2% forecasted would likely boost the dollar and pressure Treasury prices.

The dollar could do with the lift, having lost out to the safe-haven yen and Swiss franc. It was changing hands at 110.70 yen after falling 0.7% on Thursday, the sharpest one-day loss in seven weeks.

Part of the decline came after a Wall Street Journal columnist reported Trump had mused about starting a trade fight with Japan.

The dollar also hit a four-month low on the franc around $0.9645. Against a basket of currencies, the dollar index nudged lower to 94.939 and was heading for a fourth weekly drop.

The euro was a shade higher at $1.1645, while sterling idled at $1.2939 amid ongoing uncertainty over Brexit negotiations.

In commodity markets, the dip in the dollar left gold a sliver higher at $1,200.67 an ounce.

Crude oil was slightly up too after falling more than 1% on Thursday when US data showed gasoline inventories rose unexpectedly last week.

Brent was 20 cents higher at $76.69 a barrel, while US crude edged up 23 cents to $67.99.


Share This Article

Facebook Twitter


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.


Today's Columnists

Tea with NM

Saturday, 20 July 2019

One of my most treasured memories is that of NM, better known as Dr. N.M. Perera. It was when I was a student in the UK that I first met him. NM was already a formidable left leader in Sri Lanka, an accomplished parliamentarian, a larger-than-life fi

Biosphere will one day be replaced by technosphere

Saturday, 20 July 2019

I am now nearly 90 and in my lifetime I have seen and heard the world changing so fast that homo sapiens (Latin: “wise man”), the species to which all modern human beings belong, are changing into a technology-dependent sub species, . Homo sapien

Expand employer-backed childcare to close the gender gap in Sri Lanka

Friday, 19 July 2019

In Sri Lanka, women’s formal workforce participation is at only 36%, compared with 75% for men. Sri Lanka could raise its gross domestic product by as much as 20% in the long-run by closing the gender gap in the workforce, according to one estimate

Who should be our next president?

Friday, 19 July 2019

After the recent terrorist attacks and the subsequent violence unleashed against innocent Muslims by racists, Sri Lankans are searching for a leader who can save the country. Many have lost faith in the leaders, due to the breakdown in the security a

Columnists More