China tariff fears hit markets

london — Asian and European equities stumbled Friday as investors fretted that the United States will ramp up its trade war with China by imposing fresh tariffs.

Dealers were also on tenterhooks before the publication of US nonfarm payrolls (BFP), which will give a healthcheck on the world’s biggest economy and clues for the path of interest rates.

In late-morning European trade, London stocks slid 0.5 per cent, Frankfurt fell 0.4 per cent and Paris reversed 0.3 per cent. The Euro Stoxx 50 was down 0.3 per cent.

The Dow in New York was up 0.1 per cent.

Markets suffered heady losses in the first week of September, as investors worried over contagion from the ongoing emerging markets crisis — and the US-China trade spat.

“There were no signs of an end of the week recovery, with September getting off to the worst start possible for the European indices,” said Spreadex analyst Connor Campbell. “Alongside the general market malaise — informed by the potential escalation of the US-China trade war and the sorry state of the emerge markets — the FTSE has been hampered by the pound’s recent performance, with the currency rising following signs of a Brexit breakthrough.”

In Asia, Japan’s Nikkei 225 closed down 0.8 per cent, Hong Kong’s Hang Seng was flat and China’s Shanghai Composite Index rose 0.4 per cent.

The pound won a boost this week from rekindled hopes of a longawaited trade deal between London and Brussels, ahead of Britain’s scheduled departure from the European Union next March.

The stronger pound however tends to dent London’s benchmark FTSE 100 shares index because it weighs on the profits of multinationals. Against the dollar at 2100GMT, the euro was up at $1.1644 from $1.1623, while pound rose to $1.2939 from $1.293. The yen was down to ¥110.71 from ¥110.75.

Meanwhile on Friday, all eyes are on the NFP data that is slated for publication.

“It’s the non-farm payrolls — and perhaps more critically the wage growth data — that will be in focus,” added AxiTrader analyst James Hughes.

“It’s the pace of wage growth that sits very much in focus, in terms of how the Federal Reserve acts regarding monetary policy in the medium term.

“A September [interest] rate hike is seen as being as good as nailed on, but weak salary increases are going to make it very difficult for the Fed to keep hiking rates without stubbing out inflation.” —