Stocks drop on trade and currency

hong kong — Stock markets largely retreated Monday as jitters grew over potentially fullblown trade and currency wars, analysts said. Around 1015 GMT, London’s benchmark FTSE 100 index was down 0.4 per cent compared with Friday’s close.

In the eurozone, Frankfurt’s DAX 30 lost 0.2 per cent and the Paris CAC 40 shed 0.5 per cent.

The dollar fought back versus the euro and pound, but fell against the yen. “This week is likely to see focus remain on trade, with (US President Donald) Trump not one to take a back seat and remove himself from the spotlight,” noted Craig Erlam, senior market analyst at Oanda trading group.

“Earnings season could provide a welcome distraction from the political theatre of trade wars but even here it’s going to feature as tariffs will have an impact on the outlooks of a number of companies and investors will be keen to hear their views.”

Ahead of the weekend, Trump attacked Washington’s main trading partners for their currency policies.

“China, the European Union and others have been manipulating their currencies and interest rates lower, while the US is raising rates while the dollars gets stronger and stronger with each passing day — taking away our big competitive edge. As usual, not a level playing field,” Trump tweeted. Trump’s combative stance has compounded fears of an all-out trade and currency war, with the US slapping tariffs on steel and aluminium from the EU, Canada and Mexico, in addition to levies on goods from China worth tens of billions of dollars.

In an interview with US channel CNBC broadcast Friday, Trump threatened to impose taxes on all Chinese imports, saying the US has been “ripped off by China for a long time”.