Global Stocks Fall as China Holds Firm in Trade Talks
09 Mai 2019 - 10:54AM
Dow Jones News
By Paul J. Davies
European and Asian stocks fell Thursday as China hardened its
line going into trade talks set to start later in Washington.
Shares across Asia fell with Chinese A-shares down 1.5% in
Shanghai, the Hang Seng in Hong Kong 2.25% lower and Korean stocks
down 3%. The Stoxx Europe 600 was nearly 1% lower in early trade,
while the FTSE 100 in London was down 0.6%.
U.S. stocks were priced to open lower on Thursday with futures
on both the S&P 500 and Dow Jones Industrial Average down about
0.8%. The broad index was down 0.2% at the close on Wednesday,
having been up as much as 0.5% earlier in the day.
The Wall Street Journal reported late Wednesday that Beijing has
threatened unspecified retaliation if the White House pushes
through tariff increases. It also said the Chinese leadership has
apparently taken President Trump's hectoring of the Federal Reserve
chairman as a sign he thinks the U.S. economy is more fragile than
he has publicly claimed.
"Equities have had one of the strongest starts to a year in 30
years, but most of the good news is now in the price," said Graham
Secker, European equity strategist at Morgan Stanley. "The latest
twist in the U.S.-China trade negotiations adds another layer of
uncertainty and it's tricky to work out what's true versus what's
rumor and speculation."
Morgan Stanley thinks tariffs will be implemented by the end of
the week but that they will prove to be temporary. However, Mr.
Secker said it's hard to be sure of any of this.
The Chinese currency fell to its weakest level since early
January, hitting 6.84 yuan to the dollar in offshore futures
markets. The dollar was also weaker against a broad basket of
currencies with the WSJ Dollar Index down 0.04%.
In government bond markets, yields fell further as investors
sought safety pushing up bond prices. The yield on 10-year U.S.
Treasuries was 2.447% from 2.470% Wednesday, while the German bund
yield fell to -0.059%, the most deeply negative it has been since
late March.
In commodities markets, oil fell 1% to $69.69 a barrel, while in
another sign of haven seeking, gold was up 0.2% at $1,284.10 an
ounce.
Write to Paul J. Davies at paul.davies@wsj.com
(END) Dow Jones Newswires
May 09, 2019 04:39 ET (08:39 GMT)
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