European markets slide on G20 disagreement
LONDON: World stock markets fell yesterday after G20 finance ministers failed to renew an anti-protectionist pledge, in the face of Donald Trump’s “America First” push. Asia and Europe also beat a retreat as investors took profits from last week’s bumper gains and dumped risky equities for safer assets.
Over the weekend, in an early taste of what Donald Trump’s presidency spells for the world, the G20 failed to get Washington to sign off on a pledge to reject protectionism in a closing statement. Commitments of support to the existing multilateral trade system, including the World Trade Organization (WTO), were also conspicuously missing from the final communique from the meeting of finance ministers from the G20 group of developed and emerging nations in the German spa town of Baden-Baden.
“The European equity markets started the week on a heavy risk-off sentiment after the G20 communique explicitly reflected the US intentions to establish trade protectionist measures,” said London Capital Group analyst Ipek Ozkardeskaya. The move follows Trump’s warnings to throw up levies and revise global agreements he says are unfair to the United States. Wall Street dipped at the open, with the Dow slipping 0.5 percent.
‘More aggressive’
Citi analyst Ebrahim Rahbari argued in a note to clients that rising protectionism posed a key risk to the world economy. “Overall, we continue to think that the new US administration will pursue a more aggressive position on international trade,” Rahbari said. “We see a continuation of the gradual rise in protectionism in recent years and for globalization to stall, but we see a major rise in protectionism-including the risk of trade wars-as one of the main risks to the global outlook.”
In London, the pound took a small hit, dropping around half a cent, after the British government announced it would begin the twoyear procedure to exit the European Union on March 29.
Share prices remained broadly stable, with the blue chip FTSE 100 index down slightly. Vodafone shares dipped 0.2 after the British mobile phone giant revealed it will merge its Indian unit with Idea Cellular to create India’s largest telecoms operator.
In Mumbai, Idea Cellular reversed an early rally to sink seven percent. The news followed months of speculation they were ready to sign a deal to help fend off fierce Indian competitor Reliance Jio.
In Zurich, Swiss banking giant UBS saw its share price slide 1.8 percent to 15.76 Swiss francs. Legal sources told AFP yesterday that UBS will go on trial in France for establishing a wide-ranging tax fraud scheme worth nearly 10 billion euros.
UBS will be charged with illegal banking practices and dissimulating tax fraud, the sources said, adding UBS’s French subsidiary will also go on trial for complicity.
Crude prices dropped as investors continued to react to data released on Friday showing the number of oil wells in operation in the United States at the highest point since September 2015, adding to fears efforts by the OPEC cartel to boost prices by restraining production may not ease oversupply on the market. — AFP