Global stocks sink after Trump threatens more China tariffs

BEIJING (AP) – Global stocks sank yesterday after United States (US) President Donald Trump threatened more tariff hikes on Chinese imports if talks aimed at ending a trade war fail to produce an interim agreement.

Market benchmarks in London, Frankfurt, Shanghai and Tokyo declined.

Trump said on Tuesday that an agreement on the ‘Phase 1’ deal announced last month “could happen soon”. But he warned he was ready to raise tariffs “very substantially” if that fails.

 The two sides disagree publicly about whether Washington agreed to roll back some punitive tariffs imposed in the fight over Beijing’s trade surplus and technology ambitions. The Chinese government said last week that was settled, but Trump denied that.

Trump’s comments “served as a reminder of the challenge that the two sides face,” said Jingyi Pan of IG in a report. However, she said, investors saw them as “positioning statements”, reducing their impact.

Wall Street closed on Tuesday with modest gains.

In early trading, London’s FTSE 100 declined 0.4 per cent to 7,338.51 and Frankfurt’s DAX lost 0.5 per cent to 13,222.13. France’s CAC 40 shed 0.5 per cent to 5,888.55. Wall Street, futures for the benchmark Standard & Poor’s 500 index and the Dow Jones Industrial Average were down 0.3 per cent.

Currency traders near screens showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room in Seoul, South Korea. PHOTO: AP

In Asia, the Shanghai Composite Index lost 0.3 per cent to 2,905.24 and Tokyo’s Nikkei 225 sank 0.9 per cent to 23,319.87. Hong Kong’s Hang Seng tumbled 1.8 per cent to 26,571.46.

South Korea’s Kospi retreated 0.9 per cent to 2,122.45 and Australia’s S&P-ASX 200 sank 0.8 per cent at 6,698.40. India’s Sensex lost 0.3 per cent to 40,215.20. Taiwan, New Zealand and Singapore declined. Hong Kong shares, already under pressure from the US-China tariff war and slowing global demand, have been jolted by growing violence in anti-government protests.

The protests began in June over a proposed extradition law and expanded to include demands for greater democracy and other grievances. Hong Kong tumbled into its first recession in a decade in the latest quarter.

On Tuesday, the S&P 500 ended up 0.2 per cent while the Dow was unchanged. The Nasdaq gained 0.3 per cent to a record.

Momentum for the market has been mostly upward for more than five weeks as worries about the US-China trade war have eased.

Health care, technology and communication services stocks led gains on Tuesday, outweighing losses in energy companies and elsewhere.

This week, the US Labour Department is due to give updates on consumer and wholesale inflation. Economists expect a government report to show retail sales returned to growth in October.

Federal Reserve Chairman Jerome Powell gave testimony to Congress yesterday about the US economy. Most investors expect the Fed to keep interest rates on hold for now after cutting them three times since the summer.

ENERGY: Benchmark US crude lost 49 cents to USD56.31 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell six cents on Tuesday to close at USD56.80. Brent crude, used to price international oils, shed 68 cents to USD61.38 per barrel in London. It retreated 12 cents to USD62.06 the previous session.

CURRENCY: The dollar fell to JPY108.92 from JPY109.01. The euro advanced to USD1.1016 from USD1.1010.