Global Stocks Fall on U.S.-China Trade Concerns
December 10 2018 - 4:14AM
Dow Jones News
By Georgi Kantchev
World stocks kicked off the week under pressure as trade
tensions between Washington and Beijing continued to weigh on
investor sentiment.
The Stoxx Europe 600 fell 1% in early morning trade, dragged
down by the automotive and chemical sectors. Asian markets fell
across the board, with Japan's Nikkei shedding 2.1%.
On Wall Street, futures pointed to an opening loss of 0.5% for
the S&P 500, following U.S. stocks' worst opening four days to
a December since 2008. Major indexes fell more than 4% last
week.
Over the weekend, U.S. officials maintained a hard line in trade
negotiations with China despite a truce struck between President
Trump and Chinese President Xi Jinping in Buenos Aires at the start
of the month. U.S. Trade Representative Robert Lighthizer said
Sunday the U.S. would hold fast to its 90-day deadline for the
conclusion of a lasting agreement, adding that Washington would
impose punishing tariffs on Chinese imports if none is reached.
For its part, China on Sunday summoned the U.S. ambassador to
China, Terry Branstad, to demand the U.S. retract its arrest
warrant for a senior executive at Huawei Technologies Co. who was
taken into custody in Canada.
Trade uncertainty, coupled with worries about slowing global
growth and geopolitical tensions, have curbed risk appetite among
investors in recent months.
"It's clear that there will be ongoing trade tensions, and that
matters for investors," said Ann-Katrin Petersen, investment
strategist at Allianz Global investors. "This is a superpower
rivalry that will continue for longer."
World trade growth is already slowing and leading indicators are
also trending downward, economists at Citigroup wrote in a report
to clients Monday. Growth in global merchandise trade volumes in
September was at its lowest level since early 2018, the bank
said.
U.S. jobs data on Friday showed that nonfarm payrolls increased
a seasonally adjusted 155,000 in November to cap the slowest
three-month growth rate in a year, a sign the economy could be
losing some momentum after a strong year.
"There's more downside for global growth. We expect a period of
lower returns and higher volatility going forward," Ms. Petersen
said.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was down 0.2%. The 10-year U.S. Treasury yield
was broadly unchanged at 2.850%. Yields move inversely to
prices.
In Europe, investors were bracing for a planned Tuesday vote on
U.K. Prime Minister Theresa May's Brexit deal. The U.K. Parliament
is expected to reject Ms. May's deal, throwing plans for the U.K.'s
departure from the European Union on March 29 into turmoil.
The European Court of Justice, the EU's highest court, ruled
Monday that the U.K. government can unilaterally reverse its
decision to leave the bloc without the approval of its EU
counterparts. The ruling is a boost anti-Brexit campaigners but
further complicates Ms. May's struggle to win parliamentary backing
for her deal.
The British pound was volatile against the U.S. dollar, recently
down 0.2%.
Later in the week, investors will be focusing on the meeting of
the European Central Bank, which is widely expected to leave
interest rates unchanged and announce the end of its massive
quantitative easing program.
Official Chinese data indicated a slowdown in the world's
second-largest economy as its export growth slowed sharply in
November. Total exports grew 5.4% from a year earlier, decelerating
from a 15.6% increase in October, missing economist forecasts for
10% growth. Import growth also missed forecasts.
In Asia, Hong Kong's Hang Seng was down 1.2% while South Korea's
Kospi fell 1.1%.
In commodities, Brent crude, the global oil price benchmark,
rose 0.4% while gold was up 0.1%.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
(END) Dow Jones Newswires
December 10, 2018 04:59 ET (09:59 GMT)
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