Global shares mixed as US-China trade tensions cloud outlook

Elaine Kurtenbach

AP – European shares were mostly higher yesterday after benchmarks mostly fell in Asia ahead of talks between the United States (US) and China aimed at resolving the trade war between the world’s two biggest economies.

Adding to jitters over the economic outlook, the new head of the 189-nation International Monetary Fund (IMF) warned the world economy is in the grips of a “synchronised global slowdown” that will yield slower growth for 90 per cent of the world this year.

IMF Managing Director Kristalina Georgieva said that an updated IMF forecast to be released next week will show growth falling to its lowest point since the beginning of this decade.

But European markets bounced back, with Germany’s DAX climbing 0.6 per cent to 12,041.90. The CAC 40 in Paris picked up 0.4 per cent to 5,479.90, while in London, the FTSE 100 edged 0.1 per cent higher to 7,150.31.

Futures also pointed to a rebound on Wall Street, with the contract for the Dow Jones Industrial Average up 0.3 per cent at 26,228.00. That for the S&P 500 climbed 0.4 per cent to 2,904.30.

Asian trading was overshadowed by losses overnight in New York after the US blacklisted a group of Chinese companies.

Investors monitor stock prices at a brokerage in Beijing. PHOTO: AP

The move added to tensions ahead of the trade talks due to resume today in Washington.

Japan’s Nikkei 225 index lost 0.6 per cent to 21,456.38 and the Hang Seng in Hong Kong dropped 0.8 per cent to 25,682.81. Australia’s S&P ASX 200 shed 0.7 per cent to 6,546.70. The Shanghai Composite index reversed early losses, gaining 0.4 per cent to 2,924.86. The Sensex in India picked up 1.1 per cent to 37,937.40, while shares in Taiwan and Southeast Asia declined. South Korean and Malaysian markets were closed for holidays.

China demanded Washington lift the sanctions on Chinese tech companies and warned yesterday it will “resolutely safeguard” the country’s interests.

The Ministry of Commerce criticised the curbs imposed on sales of US technology to a group of Chinese companies as interference in the country’s affairs.

“The US tactics are undoubtedly a high risk, seeking to pressure the Chinese trade delegation before the main event really gets underway,” Jeffrey Halley of Oanda said in a commentary.

In New York, the S&P 500 index lost 1.6 per cent to 2,893.06. The Dow slid 1.2 per cent to 26,164.04 and the Nasdaq, which is heavily weighted with technology companies, dropped 1.7 per cent, to 7,823.78.

Smaller company stocks were also big decliners, sending the Russell 2000 index down 1.7 per cent, to 1,472.60.

The yield on the 10-year Treasury fell to 1.53 per cent from 1.55 per cent late Monday, a signal that investors are favouring lower-risk investments amid the trade war turmoil. Utilities and real estate companies, both safe-play sectors, held up better than the rest of the market, though they also ended the day in the red.

The latest escalation in US-China tensions adds yet another worry for investors already anxious over a bevy of political and economic concerns. Last week, the S&P 500 posted its first back-to-back losses of one per cent this year as surprisingly weak numbers in surveys of manufacturing and service industries showed the US-China trade war is threatening US economic growth.

Benchmark crude oil dropped 12 cents to USD52.51 per barrel in electronic trading on the New York Mercantile Exchange. It fell 12 cents to settle at USD52.63 a barrel yesterday. Brent crude oil, the international standard, slid 19 cents to USD58.05 a barrel.

While the price of US crude is up just under nine per cent so far this year, it remains off by more than 27 per cent from a year ago. That slide in prices over the past 12 months has weighed on energy stocks this year.

The dollar rose to JPY107.26 from JPY107.07 yen on Tuesday. The euro rose to USD1.0989 from USD1.0956.