Shares slide on trade worries

TOKYO — Global share prices fell on Monday on escalating trade tensions between the United States and major economies while crude oil prices gave up some of the hefty gains made after major oil exporters agreed to a modest increase in production.

European shares, which hit multi-week lows last week, were expected to extend declines, with financial spread-betters predicting Britain’s FTSE and Germany’s DAX would open 0.50% weaker, and France’s CAC to open 0.60% down.

In Asia, S&P500 mini futures eased as much as 0.6% while MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.95% to 6-1/2-month lows. Japan’s Nikkei lost 0.80%.

The Wall Street Journal reported that US President Donald Trump plans to bar many Chinese companies from investing in US technology firms and block additional technology exports to China.

“Until last week, there was vague optimism that we can muddle through this. But now it looks like, unless the US lays down its arms, things will be getting more chaotic,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

As the threat of a full- blown trade war has become all the more real, MSCI’s gauge of stocks across the globe has fallen in five of the last six weeks, including last week, when it declined 1% — its biggest weekly drop in three months.

Chinese shares were among the biggest losers, tumbling 3.7% last week, as Trump put the heat on Beijing, threatening to hit $200 billion of Chinese imports with 10% tariffs.

Policy makers in China moved fast to temper any potential economic drag from the trade dispute, as its central bank said on Sunday it would cut the amount of cash some banks must hold as reserves by 50 basis points ( bps).

The reduction in reserve requirements, the third by the central bank this year, had been widely anticipated by investors and is aimed at accelerating the pace of debt-for-equity swaps and spur lending for smaller firms.

Despite the move, the CSI300 Index of mainland Chinese shares lost 0.80%, edging near a one-year low touched on Friday.

The index of global auto manufacturers remained soft after 4.7% fall last week.

Mr. Trump threatened to impose a 20% tariff on Friday on all imports of European Union (EU)assembled cars, a month after his administration launched an investigation into whether auto imports posed a national security threat. A senior European Commission official said on Saturday that the EU will respond to any US move to raise tariffs on cars made in the bloc.

Investors and traders are worried that threats of higher US tariffs and retaliatory measures by others could derail a rare period of synchronized global growth.

Oil prices were supported after the Organization of the Petroleum Exporting Countries (OPEC) and non- OPEC producers agreed on a modest increase in production from next month, without announcing a clear target for the output increase, leaving traders guessing how much more will actually be pumped.

OPEC and non- OPEC producers said in their statement that they would raise supply by returning to 100% compliance with previously agreed output cuts, after months of underproduction.

“In reality, there aren’t many countries that can raise outputs, with only Saudi Arabia having the capacity to flexibly increase the output,” said Tatsufumi Okoshi, senior commodity economist at Nomura Securities.

“But if Saudis alone increase output sharply, they could face backlash from some other countries.” —