ZCZC
BCN-12
WORLD-MARKETS
Wall Street dives on angst over growth, US-China truce
NEW YORK, Dec 5, 2018 (BSS/AFP) – Wall Street stocks plunged Tuesday on
worries about US economic growth and revived doubts about trade wars as the
Trump administration sent mixed signals on their detente with China.
A day after global stocks rallied on a weekend US-China announcement
suspending new tariffs, international markets mostly pulled back as investor
focus shifted to the lack of concrete progress in reaching a long-term
agreement to the dispute.
“Can the US and China really resolve their differences in 90 days?” asked
Rodrigo Catril, senior strategist at National Australia Bank.
“It seems that more details and signs of progress will be needed if the
initial trade truce warm fuzzy feeling is to be sustained.”
All three major US indices fell at least three percent, with the broad-
based S&P 500 diving 3.2 percent to 2,700.06, leaving it barely positive for
the year.
Bourses in London, Paris, Frankfurt and Tokyo also fell.
– A ‘Tariff Man’ –
Trump, abruptly shifting tone from the weekend emphasis at comity with
China, signaled he was more than happy to impose tariffs if a “fair” deal
with the Asian giant did not materialize.
“I am a Tariff Man,” Trump said on Twitter. “When people or countries come
in to raid the great wealth of our Nation, I want them to pay for the
privilege of doing so…. We are right now taking in $billions in Tariffs.
MAKE AMERICA RICH AGAIN.”
In another trade matter, Trump attended a White House meeting with German
automakers as the US and European Union work to resolve US complaints about
the trade deficit between the two economies.
The US president has for months been threatening tariffs on imported
autos, which would primarily hit Germany, but in July pledged not to take any
steps against the European Union while efforts to reach a resolution were
underway.
MORE/0938
ZCZC
BCN-13
WORLD-MARKETS 2 LAST NEW YORK
– Recession ahead? –
Investors also cited a signal in the US bond market, often seen as an
early-warning indicator of a US recession, as a catalyst for one of Wall
Street’s worst days of the year.
The difference in yield between the two- and 10-year US Treasury notes has
narrowed sharply in recent days, raising concerns about a so-called
“inversion” in which interest on short-term bonds overtakes the rate on long-
term bonds.
The shift comes amid signs of weakening global growth and mounting
expectation of a slowdown in the United States. Most analysts still do not
expect a US recession in 2019.
A note from S&P Global Ratings said the US was nearing the “latter” stages
of a multi-year growth cycle, predicting that US growth would slow from 2.9
percent in 2018 to 2.3 percent in 2019 and 1.8 percent in 2020.
“If history is a guide, the end to this cycle will likely result from some
combination of the bursting of an asset-price bubble, an oil-price spike or a
misstep by the Fed (which has been known to tighten monetary policy either
too early or too late),” S&P said.
Elsewhere, Britain’s Brexit quagmire is coming to a head as lawmakers
debate Prime Minister Theresa May’s exit deal over the next five days.
In a setback for May, the House of Commons voted 311-293 to force the
government to publish the full legal advice it received from the attorney
general about the divorce deal May struck with the European Union last month.
A defeat for the prime minister next week in the overall plan could
trigger a no-confidence vote leading to early elections, leaving the Brexit
process in utter chaos.
– Key figures around 2200 GMT –
New York – Dow Jones: DOWN 3.1 percent at 25,027.07 (close)
New York – S&P 500: DOWN 3.2 percent at 2,700.06 (close)
New York – Nasdaq: DOWN 3.8 percent at 7,158.43 (close)
London – FTSE 100: DOWN 0.6 percent at 7,022.76 (close)
Frankfurt – DAX 30: DOWN 1.1 percent at 11,335.32 (close)
Paris – CAC 40: DOWN 0.8 percent at 5,012.66 (close)
EURO STOXX 50: DOWN 0.8 percent at 3,189.25 (close)
Tokyo – Nikkei 225: DOWN 2.4 percent at 22,036.05 (close)
Hong Kong – Hang Seng: UP 0.3 percent at 27,260.44 (close)
Shanghai – Composite: UP 0.4 percent at 2,665.96 (close)
Oil – West Texas Intermediate: UP 30 cents at $53.25 per barrel
Oil – Brent Crude: UP 39 cents at $62.08 per barrel
Euro/dollar: DOWN at $1.1342 from $1.1354 at 2200 GMT
Dollar/yen: DOWN at 112.78 yen from 113.66
Pound/dollar: DOWN at $1.2713 from $1.2725
BSS/AFP/HR/0940