Global markets lower amid uncertainty about US-China trade

BEIJING (AP) — Global stock markets were lower yesterday amid doubts about the status of a United States (US)-Chinese trade deal after the US Federal Reserve chairman said it is likely to leave its benchmark interest rate unchanged.

London and Frankfurt opened lower while Tokyo and Hong Kong declined. Shanghai edged higher.

Investors were wary after The Wall Street Journal reported Chinese negotiators were reluctant to commit to the size of purchases of US farm goods in an interim agreement aimed at ending a tariff war.

US President Donald Trump said last month Beijing would buy up to USD50 billion of soybeans and other American farm goods. Chinese officials have never confirmed that.

Investors are cautions “seemingly on the lack of good news on trade talks with China,” said Stephen Innes of AxiTrader in a report.

“It’s more about China getting locked into a numerical commitment as opposed to balking at the deal,” said Innes. “This is something that needs to get ironed out and certainly not a bridge too far.”

A currency trader stretches at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea yesterday. Asian stock markets were mixed yesterday amid doubts about the status of a US-Chinese trade deal after the US Federal Reserve’s chairman said it is likely to leave its benchmark interest rate unchanged. PHOTO: AP

Meanwhile, US Fed Chairman Jerome Powell said he expects the US economy to keep growing at a solid pace but faces risks from slower global growth and trade tension. The Fed cut short-term rates last month for the third time this year, to a range of 1.5 per cent to 1.75 per cent.

In early trading, London’s FTSE 100 shed 0.3 per cent to 7,329.85 and Germany’s DAX lost 0.4 per cent to 13,175.13. France’s CAC 40 retreated 0.1 per cent to 8,901.59.

On Wall Street, futures for the benchmark Standard & Poor’s 500 index and Dow Jones Industrial Average were off 0.2 per cent.

In Asia, Tokyo’s Nikkei 225 lost 0.8 per cent to 23,141.55 while the Shanghai Composite Index gained 0.2 per cent to 2,908.87. Hong Kong’s Hang Seng dropped 0.9 per cent to 26,323.69.

Seoul’s Kospi advanced 0.8 per cent to 2,139.23 and Sydney’s S&P-ASX 200 gained 0.6 per cent to 6,735.10. India’s Sensex added 0.4 per cent to 40,257.81. Taiwan and Southeast Asian markets declined while New Zealand advanced.

On Wall Street, buying focussed on safe-play stocks such as utilities, real estate companies and makers of consumer products that tend to pay higher dividends. Banks, industrial stocks and companies declined.

The benchmark S&P 500 index rose 0.1 per cent to 3,094.04, a record.

The Dow Jones Industrial Average gained 0.3 per cent to 27,783.59, also a record.

The Nasdaq dropped 0.1 per cent to 8,482.10.

China’s government reported yesterday that factory activity and spending weakened more than expected in October.

Growth in industrial production slowed to 4.7 per cent from September’s 5.8 per cent.

Retail sales growth weakened to a six-month low of 7.2 per cent over a year earlier from September’s 7.8 per cent. Investment in factories, real estate and other fixed assets rose 5.2 per cent in the first 10 months of the year, down from 5.4 per cent in the nine months through September.

Japanese data showed economic growth slowed to 0.1 per cent over the previous quarter in the three months ending in September from the previous quarter’s 0.4 per cent. Consumption growth weakened to 0.4 per cent from 0.5 per cent.

The slowdown “isn’t too worrying as it reduces the likelihood of a slump in output” after a sales tax hike takes effect in October, Marcel Thieliant of Capital Economics said in a report.

Also yesterday, Australia’s government reported employment fell by a bigger-than-expected margin in October.

That prompted expectations the central bank will cut interest rates to prop up economic growth.

ENERGY

Benchmark US crude rose 29 cents to USD57.40 per barrel in electronic trading on the New York Mercantile Exchange.

The contract gained 32 cents on Wednesday to close at USD57.12. Brent crude, used to price international oils, advanced 30 cents to USD62.67 per barrel in London. It gained 29 cents the previous session to USD62.37.

CURRENCY

The dollar declined to JPY108.63 from Wednesday’s JPY108.84.

The euro declined to USD1.1006 from USD1.1007.