Global stocks sink ahead of US tariff deadline, US, EU rates

BEIJING (AP) – Global stock markets fell yesterday as investors looked ahead to a United States (US) tariff deadline on Chinese imports and American and European interest rate decisions.

Markets also were watching for the outcome of Britain’s snap election tomorrow amid uncertainty over plans to leave the European Union (EU).

Benchmarks in London and Frankfurt declined in early trading. Tokyo and Hong Kong declined while Shanghai closed higher after spending most of the day in negative territory.

Washington is due to impose new tariff hikes on Sunday on USD160 billion of Chinese goods in a fight over Beijing’s technology ambitions and trade surplus.

Investors expect United States (US) President Donald Trump to put off or scrap the increase but talks on an interim “Phase 1” agreement announced in October have failed to agree on details.

“Everything could break loose if the tariffs don’t get postponed,” said Stephen Innes of AxiTrader in a report. That would tell investors “they have yet again been taken down the trade talk garden path only to end up at the cliff edge of trade war purgatory”.

A currency trader watches computer monitors near the screens showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between US dollar and South Korean won at the foreign exchange dealing room in Seoul, South Korea. PHOTO: AP

Chinese spokespeople have appealed for a prompt resolution to the fight that threatens to chill global economic growth. Trump rattled markets last week by saying he might be willing to wait until after next year’s presidential election.

London’s FTSE 100 opened 0.6 per cent lower at 7,191.95 and Germany’s DAX lost 0.7 per cent to 13,007.19. France’s CAC 40 declined 0.5 per cent to 5,808.63.

On Wall Street, futures for the Standard & Poor’s 500 index and the Dow Jones Industrial Average were down less than 0.4 per cent.

In Asia, the Shanghai Composite Index ended up 0.1 per cent at 2,917.32. Tokyo’s Nikkei 225 was off less than 0.1 per cent at 23,410.19 and Hong Kong’s Hang Seng declined 0.2 per cent to 26,436.62.

Seoul’s Kospi rose 0.4 per cent to 2,098.00 and Sydney’s S&P-ASX 200 lost 0.3 per cent to 6,706.90. India’s Sensex opened down 0.5 per cent at 40,270.11. Taiwan and Singapore declined while New Zealand advanced. Wall Street closed lower, snapping a three-day winning streak for the benchmark S&P 500 index. Losses for technology, health care and financial companies outweighed gains elsewhere in the market.

The S&P 500 lost 0.3 per cent and the Dow fell 0.4 per cent. The Nasdaq dropped 0.4 per cent.

Forecasters expect little change from the US Federal Reserve when its latest policy meeting ends today.

The US central bank has cut its benchmark lending rate three times this year as what Chairman Jerome Powell called insurance against the economic drags from the tariff battle with Beijing and slower global growth.

A meeting of the European Central Bank tomorrow is also expected to produce no surprises. Forecasters expect the bank to affirm commitment to its dovish bias amid warnings about European economic weakness and risk to growth.

British leaders are looking to tomorrow’s election for 650 seats in the House of Commons to break an impasse over departure from the EU and London’s future relationship with the trade bloc.

Prime Minister Boris Johnson pushed for a vote more than two years early in hopes of winning a majority. He has promised to take Britain out of the EU by January 31 is his Conservatives win.

The opposition Labour Party is promising to renegotiate the divorce deal, then give voters the choice in a referendum of leaving the EU on those terms or remaining in the bloc.

CHINA INFLATION: Chinese consumer inflation spiked to a seven-year high of 4.5 per cent.

ENERGY: Benchmark US crude lost seven cents to USD58.95 per barrel in electronic trading on the New York Mercantile Exchange. The contract declined 18 cents on Monday to close at USD59.02. Brent crude, used to price international oils, shed three cents to USD64.22 per barrel in London. It lost 14 cents the previous session to USD64.25.

CURRENCY: The dollar gained to JPY108.59 from Monday’s JPY108.55. The euro advanced to USD1.1070 from USD1.1064.