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European stocks slide as US-China trade tensions simmer
LONDON, Aug 2, 2018 (BSS/AFP) – European stock markets sank Wednesday
after US President Donald Trump reportedly raised the stakes in a global
trade war with China, dealers said.
London stocks dived by over one percent, hit also by weak manufacturing
data on the eve of a likely UK interest rate hike, while Frankfurt and Paris
showed smaller losses at the closing bell.
Wall Street gave up early gains to trade unchanged approaching midday in
New York, with Dow member Apple’s shares surging following a stronger-than-
expected earnings report.
In a mixed Asia session, Shanghai and Hong Kong both lost ground, despite
overnight Wall Street gains.
“European stock markets are largely lower as fears about global trade have
crept back into traders’ psyches,” said CMC Markets UK analyst David Madden.
– ‘Sense of confusion’ –
“Tensions between the US and China have risen after President Trump
threatened to slap a higher tariff on $200 billion worth of Chinese imports,”
Madden said.
“This is seen as a move by Mr Trump to put pressure on Beijing.”
Trump is now considering a 25 percent tariff on $200 billion in Chinese
imports, rather than the 10 percent previously touted, reports said Tuesday.
Contradicting reports surrounding the state of US-China trade relations
were creating “a sense of confusion across markets, while also possibly
desensitising investors towards global trade developments”, said Lukman
Otunuga, an analyst at FXTM.
This was weighing on “risk appetite”, he said.
The US imposed tariffs of 25 percent on $34 billion of Chinese products
earlier this month, with plans to add another $16 billion of imports on
Tuesday.
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Trump initially threatened to levy 10 percent on an additional $200
billion but that figure may now rise to 25 percent, sources told the
Washington Post and Bloomberg.
“The Trump administration has decided to use another aggressive tactic to
bring China on the negotiating table,” noted ThinkMarkets analyst Naeem
Aslam.
In Beijing meanwhile, Chinese foreign ministry spokesman Geng Shuang said
Wednesday that “blackmail and pressure from the US side will never work on
China”.
– BoE rate hike? –
The latest developments mark a major ramping up of pressure over
Washington’s trade standoff with Beijing.
“Yesterday’s optimism over progression on US-China talks has fallen short,
as China calls out US President Donald Trump for attempting to blackmail the
Chinese with threats of further tariffs,” added IG analyst Joshua Mahony.
Back in London on Wednesday, the capital’s benchmark FTSE 100 index sank
on weak manufacturing data and disappointing company earnings on the eve of a
likely interest rate hike.
The Bank of England is widely expected Thursday to hike interest rates to
combat stubbornly high inflation, as it also eyes potential fallout from both
Brexit and the global trade war, economists said.
Policymakers are forecast to increase the British central bank’s main
interest rate by a quarter-point to 0.75 percent — which would be the
highest level for more than nine years.
BSS/AFP/HR/1020