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Global stocks fall amid revived trade worries
NEW YORK, Jan 23, 2019 (BSS/AFP) – Global stocks fell Tuesday amid revived
worries over US-China trade relations and a sense the January rally is
fading.
Wall Street indices, which have been on a nearly unbroken ride higher the
last four weeks, following December’s rout, fell more than one percent.
Earlier, European and Asian shares also pulled back due in part also to
profit taking and economic worries after the International Monetary Fund on
Monday trimmed its global growth forecasts.
Tuesday’s pullback “fostered a sense that the rally from deeply oversold
conditions has run its course, such that the stock market will now be more
attuned to stories highlighting weak growth or sticking points in trade
negotiations with China,” Briefing.com analysts said.
Stocks could soon retest their recent lows, according to notes released
Tuesday from Wells Fargo and Canaccord Genuity that were based on historic
precedents akin to the current situation.
“For markets to defy history,” said Wells Fargo strategist Sameer Samana,
“we believe it would take a significant clearing of the decks in terms of
market concerns,” which include monetary tightening, trade, Brexit and
slowing growth, especially in China.
But such a scenario still has “a low probability,” added Samana.
Stocks had gotten support in recent sessions due to increased hopes over
US-China trade relations. But some of that optimism came under question
Tuesday.
Bloomberg News reported that said the two sides were struggling to reach
agreement on the crucial matter of intellectual property, which is a key
source of anger in Washington.
Later Tuesday, The Financial Times and CNBC reported that the United
States had rejected Beijing’s offer to hold a preparatory meeting in
Washington ahead of next week’s high-level trade talks.
The White House denied the report shortly before the closing bell, lifting
US stocks a bit but not enough to push them into positive territory.
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– ‘Hard landing’ in China ? –
Worries about China were front and center after the official Xinhua News
Agency reported that President Xi Jinping had told top provincial leaders the
Communist Party “is facing long-term and complex tests in terms of
maintaining long-term rule, reform and opening-up.”
The comments suggested he was becoming worried about the effects of
slowing economic growth.
“Recent signs suggest that China is struggling to sustain economic
momentum, and risks of a hard landing are rising. If China falls back to
Earth, we will all feel the tremor,” economists at Northern Trust said in an
analytical note.
But a Chinese official expressed confidence in the country’s prospects at
the World Economic Forum in Davos.
“China is slowing down but it’s not going to be a disaster,” said Fang
Xinghai, vice-chairman of China’s Securities Regulatory Commission, a key
government watchdog.
“China has been able to avoid financial crisis in the last 40 years. We
have a very top down approach to financial risk management,” Fang said.
“If there is any risk accumulated in the system, the government will step
in and order the risk to be reduced.”
– Key figures around 2140 GMT –
New York – DOW: DOWN 1.2 percent at 24,404.48 (close)
New York – S&P 500: DOWN 1.4 percent at 2,632.90 (close)
New York – Nasdaq: DOWN 1.9 percent at 7,020.36 (close)
London – FTSE 100: DOWN 1.0 percent at 6,901.39 Frankfurt – DAX 30: DOWN
0.4 percent at 11,090.11 (close)
Paris – CAC 40: DOWN 0.4 percent at 4,847.53 (close)
EURO STOXX 50: DOWN 0.4 percent at 3,112.80 (close)
Tokyo – Nikkei 225: DOWN 0.5 percent at 20,622.91 (close)
Hong Kong – Hang Seng: DOWN 0.7 percent at 27,005.45 (close)
Shanghai – Composite: DOWN 1.2 percent at 2,579.70 (close)
Euro/dollar: DOWN at $1.1361 from $1.1365 at 2200 GMT Monday
Pound/dollar: UP at $1.2957 from $1.2892
Dollar/yen: DOWN at 109.37 yen from 109.67
Oil – Brent Crude: DOWN $1.24 at $62.74 per barrel
Oil – West Texas Intermediate: DOWN $1.23 cents at $52.57
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