Equities drop amid fading trade relief, Italy concerns
singapore — Global markets slipped on Tuesday as investors took stock of the standstill in US trade negotiations with China, despite a fresh deal on North American trade.
In Europe, concerns about Italy’s public spending plans weighed on sentiment.
Germany’s DAX lost 0.6 per cent to 12,260 and the CAC 40 in France dropped 0.7 per cent to 5,471. Italy’s FTSE MIB was down 0.1 per cent, extending a string of losses since last week. Britain’s FTSE 100 fell 0.3 per cent to 7,472. Wall Street was set to open slightly lower. Dow futures shed 0.2 per cent and S&P 500 futures were down 0.1 per cent.
Eurozone nations have criticised Italy’s budget proposals, which they say would increase the country’s debt and skirt the rules of good fiscal housekeeping shared by the 19 nations using the euro currency. Italy plans to raise its budget deficit to up to 2.4 per cent of its gross domestic product, exceeding a 1.6 per cent limit the government had set for 2018. The eurozone sets overall targets of 3 per cent annual deficits and commits countries to move toward 60 per cent of overall debt. Italy’s debt currently stands at about 130 per cent of its GDP. Concerns shook the country’s financial markets on Tuesday. The FTSE MIB index has been largely falling since last week, though it trimmed its losses on Tuesday.
Canada joined the revamped North American trade agreement with the US and Mexico late Sunday after weeks of negotiations.
“The revamped trade pact adds to Korus, the bilateral trade agreement between the US and Korea, to show that the Trump administration has capacity to strike trade deals,” Zhu Huani of Mizuho Bank said in a commentary. “Nonetheless, a protracted trade war with China is still expected given both sides have little appetite for further negotiation at this juncture,” she added.
Hong Kong’s Hang Seng tumbled 2.4 per cent to 27,126.38. Australia’s S&P/ASX 200 lost 0.8 per cent to 6,126.20, as the Reserve Bank of Australia maintained its economic outlook and kept its benchmark interest rate at a record-low 1.5 per cent. South Korea’s Kospi lost 1.3 per cent to 2,309.57, while the benchmark Nikkei 225 in Tokyo added 0.1 per cent to 24,270.62. Markets in the Chinese mainland were closed for a week-long holiday. Stocks fell in Taiwan and throughout Southeast Asia.