ZCZC
BCN-19
EUROPE-STOCKS
US stocks purr along despite latest trade war volley
LONDON, Aug 9, 2018 (BSS/AFP) – US stock markets largely shrugged off
latest volley of tariffs in the escalating trade war between the United
States and China, although oil prices fell sharply.
In late morning trading, Wall Street’s main indices were mixed, with the
blue-chip Dow Jones Industrial Average slipped less than a tenth of a
percent.
However the broader S&P 500 and tech-heavy Nasdaq Composite both climbed
despite China announcing it will impose 25 percent tariffs on a further $16
billion of US goods, making good on its promise to retaliate against new
American levies.
The US government announced late Tuesday that 25 percent tariffs on $16
billion in Chinese goods would go into effect on August 23.
“Markets had a muted reaction to China’s announcement that it plans to
impose tariffs on $16 billion worth of US goods, starting on 23 August,” said
market analyst David Madden at CMC Markets UK.
“The token retaliation from Beijing keeps the trade spat alive, and it
seems like China were doing it to send a message, rather than to inflict
financial pain on the US,” he added.
European markets were less sanguine, with both Frankfurt and Paris stocks
moving downwards.
However London’s benchmark FTSE 100 index carved out a gain of 0.8
percent.
“It is not hard to find the cause of the FTSE 100’s outperformance today,”
said Chris Beauchamp, chief market analyst at online trading firm IG.
“The pound continues its slide versus the dollar on fears of a ‘No Deal’
Brexit, providing at least a pleasing tailwind for UK stocks.”
The pound sank this week on growing concern of a chaotic no-deal exit for
Britain from the European Union in March 2019. The weak currency however
lifts shares in multinationals that derive the lion’s share of their earnings
in dollars.
Asia equities stuttered Wednesday, with Tokyo down 0.1 percent, Shanghai
shedding 1.3 percent, but Hong Kong ended up 0.4 percent in value.
Global stock prices had risen Tuesday on the back of solid second-quarter
US corporate earnings which temporarily took investor attention off festering
trade wars, dealers said.
Both the S&P 500 and the Nasdaq Composite are not far below records. Oil
prices, which had climbed this week on expectations that renewed US sanctions
on Iran will reduce supplies to the market, fell sharply on data showing
ample supplies in the United States.
“A weaker-than-expected fall in crude inventories has taken the wind out
of oil’s sales, with both Brent and WTI down by more than 2 percent,” said
IG’s Chris Beauchamp.
“Signs of weaker demand in the US have trumped the bullish case for oil
based on Iran tensions, which have stubbornly refused to pick up in recent
days,” he added.
BSS/AFP/HR/1016