ZCZC
BCN-12
EUROPE-STOCKS-MARKETS
World markets sink as trade war fears build
LONDON, Aug 3, 2018 (BSS/AFP) – World equities markets were in the red
Thursday as trade war fears ratcheted higher after the United States said it
was looking at more than doubling threatened tariffs on a range of Chinese
imports.
In London, sterling slipped after the Bank of England hiked its key
interest rate by a quarter-point to 0.75 percent, but seemed reticent to
announce any further rate rises amid Brexit uncertainty.
Key European markets closed the session with hefty losses, while on Wall
Street the Dow was also lower approaching midday.
In American earnings news, Tesla motors surged 8.5 percent after it
reported a bigger-than-expected quarterly loss of $717.5 million, but said it
was on track to become profitable the rest of the year.
Earlier, Asian stocks sank after the US administration confirmed it was
considering hiking levies to 25 percent from the announced 10 percent on $200
billion of Chinese goods.
Should the US follow through, it would be “a considerable step-up in the
trade dispute between US and China and would start to seriously threaten
global growth,” wrote Konstantinos Anthis, head of research at ADSS.
China’s Foreign Minister Wang Yi on Thursday called on the US to remain
“cool-headed”, but that appeal alone appeared to do little to shift the mood
on trading floors.
In Germany, the DAX blue chip index was down 1.5 percent at the closing
bell, with analysts blaming US tariff threats that would hit car
manufacturers especially hard.
– ‘Bravo to BoE’ –
Investors and analysts welcomed the BoE’s interest rate announcement, with
head of research at London Capital Group Jasper Lawler tweeting: “Bravo to
BOE for finally putting rates on course to something normal.”
MORE/HR/0955
ZCZC
BCN-13
EUROPE-STOCKS-MARKETS 2 LAST LONDON
However he added: “Shame it has left it so late that chances of a quick
reversal are much higher.”
Rising interest rates are a boon for savers but ramp up the cost of credit
for consumers and companies.
On currency markets, the pound at first edged slightly higher in response
to the rate hike, only to then drop below the level seen just before the
meeting.
“The pound’s sharp decline could be based on investors acknowledging that
today’s rate hike is a ‘one-and-done’ move,” wrote Lukman Otunuga, research
analyst at FXTM.
“With Brexit uncertainty, cooling inflationary pressures and global trade
tensions likely to obstruct the central bank’s efforts to raise interest
rates, the pound remains vulnerable to downside risks,” he added.
The BoE’s decision came a day after the US Federal Reserve held fire on
interest rates, even as it highlighted the strength of the US economy and
labour markets, indicating rate hikes ahead.
BSS/AFP/HR/1000