Trade tensions up
China responded to President Trump’s plans to impose a 10% tariff on more Chinese goods last Friday by allowing the yuan to weaken 1.43% to 7.07 against the dollar this morning. This compares with 6.68 in February, an all-time high of 8.73 in January 1994 and a historic low of 1.53 in January 1981.
Global markets reacted negatively, with all US markets down and only the Dow flat, unable to sustain the earlier rally. Tech stocks suffered in particular, with the Nasdaq down -1.32%, while the S&P500 had its worst week so far this year, with potential for more downside. Continuing US-China trade tensions and the escalating violence in Hong Kong depressed Asian markets across the board, with the Hang Seng falling 3%. The Nikkei was down 2.4%, driven down by Kobe Steel, Yahoo Japan, and SoftBank, as the manufacturing sector contracts for the third month in a row. Increased Japan-South Korea tensions dragged the Kospi down 2%, while the Topix was down 2.38% and the Shanghai Composite edged down 0.8%.
Investors fleeing for safe havens
European markets were all down on trade fears, led by CAC40 and the DAX on -3.57% and -3.11% respectively, as investors headed for the bond markets. The 10-year government bond yields fell to all-time lows, with Germany at -0.488%, Netherlands -0.376% and France -0.256%.
The FTSE was down -1.29%, and sterling gained up to 1.22 against the dollar, on increasing speculation that Prime Minister Boris Johnson is planning for a snap election after taking the UK out of the EU on October 31st, which investors are hoping may bring an end to the ongoing Brexit saga. Bottom of the benchmark is the copper miner Antofagasta (LON:ANTO) (-3.95%), after a positive month, and retailer Ocado (LON:OCDO) (-3.81%), on the sale of half of its business to M&S. The benchmark leaders are the miner Fresnillo (LON:FRES) (2.78%) and International Consolidated Airlines Group (LON:ICAG) (0.38%), the owner of British Airways.
Gold bucked the trend by increasing to a 6-year high of $1,453, as central banks bought record amounts on persisting global trade tensions. Crude fell to $55/barrel on shrinking global demand
Trade tensions up
China responded to President Trump’s plans to impose a 10% tariff on more Chinese goods last Friday by allowing the yuan to weaken 1.43% to 7.07 against the dollar this morning. This compares with 6.68 in February, an all-time high of 8.73 in January 1994 and a historic low of 1.53 in January 1981.
Global markets reacted negatively, with all US markets down and only the Dow flat, unable to sustain the earlier rally. Tech stocks suffered in particular, with the Nasdaq down -1.32%, while the S&P500 had its worst week so far this year, with potential for more downside. Continuing US-China trade tensions and the escalating violence in Hong Kong depressed Asian markets across the board, with the Hang Seng falling 3%. The Nikkei was down 2.4%, driven down by Kobe Steel, Yahoo Japan, and SoftBank, as the manufacturing sector contracts for the third month in a row. Increased Japan-South Korea tensions dragged the Kospi down 2%, while the Topix was down 2.38% and the Shanghai Composite edged down 0.8%.
Investors fleeing for safe havens
European markets were all down on trade fears, led by CAC40 and the DAX on -3.57% and -3.11% respectively, as investors headed for the bond markets. The 10-year government bond yields fell to all-time lows, with Germany at -0.488%, Netherlands -0.376% and France -0.256%.