Global stock markets drifted lower on growth and trade concerns
“A varied set of indicators flashing signs of slowing global growth were enough to unnerve investors,” said Jasper Lawler, head of research at LCG.
The broad-based declines are largely a result of the news that Trump indicated that he would not be meeting his Chinese counterpart before March 2, which marks the end of a 90-day tariffs truce mooted after Trump and Xi met in December.
Thursday’s trade developments “took off the table what the market was probably starting to price in, which was a resolution by March 1,” said Anthony Saglimbene, global market strategist at Ameriprise Financial in Troy, Michigan.
“It just adds to the fact that investors want some of these trade tensions off the front pages and it doesn’t look like we are going to get that,” Saglimbene said.
Unless American and Chinese negotiators come to a new agreement, the US is expected to raise import taxes from 10 per cent to 25 per cent for $200 billion in Chinese goods. The trade dispute between the world’s two largest economies, which has cooled in recent months, has weighed on the outlook of businesses and the global economy.
Connor Campbell, an analyst at Spreadex, said the news has “cast doubt on the chances of reaching a tariff hike-avoiding deal in time”.
US Treasury Secretary Stephen Mnuchin and trade representative Robert Lighthizer are to lead a delegation to Beijing next week for the next round of trade talks. Officials have reported little progress on contentious issues but are hopeful that a deal will be struck.
“The worries surround the uncertainties of a resolution to the likelihood of further tariffs in this
on-again, off-again confidence with regards to a deal,” Jingyi Pan of IG said in a market commentary.
US Treasury Secretary Stephen Mnuchin and trade representative Robert Lighthizer are to lead a delegation to Beijing next week for the next round of trade talks. Officials
have reported little progress on contentious issues but are hopeful that a deal will be struck.
The downgrade of growth forecasts for the 19-country eurozone was also on trader’s minds. The European Commission cut its forecast for the year to 1.3 per cent from 1.9 per cent on Thursday, because of slowing Chinese growth and other risks.
Germany, Europe’s largest economy, saw a significant cut to its growth outlook to 1.1 per cent from 1.8 per cent. This comes on the back of economic releases showing that industrial production and factory orders slowed in December.
Japan’s Nikkei 225 index closed 2 per cent lower at 20,333.17. Hong Kong’s Hang Seng, reopening after a Lunar New Year break, gave up 0.2 per cent to 27,946.32. The Kospi in South Korea declined 1.2 per cent to 2,177.05 and Australia’s S&P ASX 200 was down 0.3 per cent at 6,071.50.
Stocks fell in the Philippines, Indonesia and Thailand but rose in Malaysia. Markets in China and Taiwan were closed.
In India the BSE benchmark Sensex plummeted over 424 points on Friday. The 30-share index cracked 424.61 points, or 1.15 per cent, to finish at 36,546.48, while the broader NSE Nifty slumped 125.80 points, or 1.14 per cent to 10,943.60.
International Brent crude futures had erased earlier losses by 1036GMT, gaining 12¢ to $61.75 per barrel. On the week, they are set for a loss of around 1.5 per cent. US West Texas Intermediate crude futures stood at $52.53 per barrel, down 11¢ and looking at a 5 per cent weekly slump, their steepest this year.
Spot gold was steady at $1,310.46 per ounce, as of 1029GMT, after hitting its lowest since January 29 at $1,302.11 on Thursday. US gold futures were up about 0.1 per cent at $1,314.70.
The dollar weakened to ¥109.79 yen from ¥109.82 late on Thursday. The euro eased to $1.1330 from $1.1341. The British pound fell to $1.2931 from $1.2953.