Global Stocks Mixed as Uncertainty Over Trade Talks Persists
May 08 2019 - 4:48AM
Dow Jones News
By Avantika Chilkoti
Global stocks were mixed Wednesday as investors closely
monitored rising U.S.-China tensions.
In Asia, the Shanghai Stock Exchange dropped 1.1%, Hong Kong's
Hang Seng Index was also down 1.2% and Korea's Kospi dropped 0.4%.
The moves echoed sharp losses in U.S. markets Tuesday.
Meanwhile, in Europe, the Stoxx Europe 600 was up 0.2% in
morning trading. Technology services and producer manufacturing
groups dragged the index higher, while companies in the finance and
utilities sectors declined on Wednesday.
Siemens, Europe's largest engineering company and a bellwether
for the regional economy, was among the biggest winners early
Wednesday, gaining 4.6% following an announcement that it would
spin off its power and gas business. Shares in Wirecard, the German
financial services group, were up 2.9% after the company posted its
latest earnings.
Futures pointed to a tepid opening for U.S. indexes with the Dow
Jones Industrial Average and S&P 500 futures roughly flat.
Despite rising tensions, China said top trade envoys will head
to Washington Thursday to resume negotiations. U.S. officials had
accused Beijing of reneging on its side of the bargain and
threatened to raise tariffs on $200 billion of Chinese imports to
25% from Friday.
It is unsurprising that the U.S. has increased pressure on China
in recent weeks, said Ed Smith, head of asset allocation research
at Rathbone Brothers Plc., the investment manager, given
expectations that talks will formally wrap up around the meeting of
G-20 leaders in Osaka in June--and President Donald Trump's usual
negotiating tactics.
"He loves a bit of brinkmanship and he particularly likes some
particularly vocal and belligerent brinkmanship," said Mr. Smith,
who is currently recommending investments he sees as stable like
the FTSE100 and S&P 500 indexes, as well as sectors like
beverages, aerospace and defense.
After falling steeply at the beginning of the year, the Cboe
Volatility Index or VIX, a yardstick for expected swings in
equities, has picked up this week.
The 10-year U.S. Treasury ticked up to 2.458% from 2.448% on
Tuesday. Yields move inversely to prices. German 10-year government
bonds were still in negative territory at -0.039% as investors mull
the possibility that President Trump could soon ramp up trade
barriers for Europe too.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was down slightly.
I
nvestors will be watching closely when the Commerce Department
publishes the latest trade data on Thursday. Economists surveyed by
The Wall Street Journal forecast a widening in the deficit in
March. And the Labor Department will publish inflation figures
Friday, with economists expecting price growth to tick up on a
year-on-year basis.
Elsewhere in commodities, global benchmark Brent crude oil was
down 0.2% on Wednesday morning at $69.76.
Analysts at Commerzbank, point out that fresh tariffs could
weigh on demand, given the U.S. and China together make up around
one-third of global oil demand. But supply has also tightened and
U.S. sanctions are set to further quell oil shipments from Iran and
Venezuela, in particular.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com
(END) Dow Jones Newswires
May 08, 2019 05:33 ET (09:33 GMT)
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