US-China squabble batters markets

SPIKING COVID CASES, UNSETTLED AMERICAN FEDERAL FUNDING AND TECH STOCK PLUNGE ALSO WEIGH

london — Global equities took a beating on Friday as China-US tensions intensified, while stalled stimulus talks in Washington fuelled fears for the economy, although Europe saw a batch of bright data.

Lingering worries about the impact on businesses of fresh coronavirus outbreaks helped trigger major profit-taking, traders said.

“It’s a sour end to the trading week with hefty declines across Europe and Asia, echoing a miserable showing on Wall Street last night,” said AJ Bell investment director Russ Mould.

The Dow was down nearly 140 points approaching midday in New York, “adding to [Thursday’s] declines in morning action as friction between the US and China heated up overnight”, said Charles Schwab analysts.

Stock markets in Europe were up to two per cent lower at the close.

Earlier in Asia, Shanghai and Hong Kong had already dived as relations between the world’s two superpowers took another bad turn when China ordered the closure of the US consulate in Chengdu in retaliation for America shuttering Beijing’s diplomatic mission in Houston this week.

Further signs of dithering in Washington would test investors’ patience, potentially prompting them to take more risk off the table han Tan, market analyst at FXTM It’s a sour end to the trading week with hefty declines across Europe and Asia, echoing a miserable showing on Wall Street

Russ Mould, investment director at AJ Bell

Stock markets were also still reeling from Thursday’s report of a rise in new jobless claims in the US which prompted doubts about any ongoing economic rebound there, traders reported.

Hopes that the data would spur US lawmakers to push on with fresh stimulus measures were undermined by the inability of Republicans and the White House to agree on a $1.0 trillion stimulus proposal.

Technology stocks have also been in the spotlight, after a sharp slide for them on Thursday helped drag the S&P 500 to its worst loss in nearly four weeks. Intel lost 17 per cent, while Apple and Microsoft also declined.

“Further signs of dithering in Washington would test investors’ patience potentially prompting market participants to take some more risk off the table, as the political brinksmanship threatens to dampen the US economic recovery,” said Han Tan, market analyst at FXTM.

Oil prices edged higher on Friday, supported by a weaker dollar, though tensions between the United States and China and wider economic uncertainty weighed.

Brent crude was up 10 cents at $43.41 a barrel at 1323GMT, while US West Texas Intermediate (WTI) crude was up 18¢ at $41.25. —