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EUROPE-STOCKS-MARKETS
Stock markets mostly drop as trade war fears deepen
LONDON, July 20, 2018 (BSS/AFP) – Stock markets mostly fell Thursday, as
fears intensified over the escalating global trade war, analysts said.
The dollar rose across the board, with the pound slumping under $1.30 for
the first time in 10 months as weak UK retail sales data dented the chances
of an interest rate hike from the Bank of England in August, experts added.
“A drop in retail sales… has sent the pound sharply lower, continuing
the general trend of the week,” noted Chris Beauchamp, market analyst at IG
trading group.
Across the Atlantic, Wall Street stocks fell, with several companies
tumbling after earnings.
But Comcast and Walt Disney Co. gained over 3 percent each, as Comcast
said it was pulling out of the bidding war with Disney for film and
television operations of Rupert Murdoch’s 21st Century Fox and would focus on
acquiring the European TV operator Sky.
– Global trade under threat –
On the macroeconomic front, the markets were still mulling Federal Reserve
Chairman Jerome Powell’s warning that the spiralling global trade war was
having a negative impact on companies in the US.
President Donald Trump has imposed steep tariffs on products from China
worth tens of billions of dollars, and has threatened to target hundreds of
billions more, on top of import taxes on steel and aluminium that have
angered allies including the EU.
The Fed chief said US businesses were already being hurt by reciprocal
tariffs on key products, pointing out: “The bottom line is a more
protectionist economy is less competitive, less productive.”
He also said that if Trump’s trade policy ultimately resulted in lower
tariffs, that could be good for the US economy.
For now, however, analysts fear that any further tariffs could put a dent
in a trend of buoyant global economic growth — and cause a headache for US
businesses.
“Increased trade tensions have raised the risk that new measures may be
taken that would have a much greater impact on global economic growth than
those enacted so far,” Fitch Ratings analysts said in a note.
“So far the scale of tariffs imposed has been too small to materially
affect our forecasts for world growth,” they wrote.
“However, further measures mooted by the US would mark a significant
escalation,” they added, warning that in the worst-case scenario, supply
chains could be disrupted, consumers’ wages could fall and job creation could
be hit.
BSS/AFP/HR/1030