Trump's Trade Threats Shatter Market Calm
2019年5月6日 - 05:55PM
Dow Jones News
By Joanne Chiu and Steven Russolillo and Donato Paolo Mancini
Stocks around the world plunged Monday after the sudden
intensification of U.S.-China trade tensions, sowing fears the
conflict could spill over into slower economic growth.
U.S. futures and stock markets in Asia and Europe were lower,
oil prices fell and the Chinese yuan weakened after President Trump
threatened to ramp up U.S. tariffs on $200 billion in Chinese
imports to 25%, up from 10% currently. That put an accord between
the two countries in doubt ahead of a new round of talks set to
begin this week in Washington.
China's delegation was preparing to go to the U.S. for the
talks, the foreign ministry spokesman said Monday.
Europe's pan-continental Stoxx Europe 600 lost 1.2%. All
national benchmarks in the region, except London's FTSE 100, which
was closed for a public holiday, were in the red.
U.S. futures pointed to opening losses of 1.9% and 1.8% for the
Dow Jones Industrial Average and S&P 500, respectively.
The Shanghai Composite Index fell 5.6%, while its counterpart in
Shenzhen tumbled 7.4%, both registering their biggest single-day
declines since 2016.
Hong Kong's Hang Seng Index dropped more than 3%. WH Group, the
Chinese owner of American pork producer Smithfield Foods, tumbled
more than 7% to a five-week low.
"Risks have clearly increased and we see a one-in-three chance
that the Sino-U. S. trade talks break down," said Eli Lee, head of
investment strategy at Bank of Singapore.
The abrupt moves -- following months of tranquil and generally
rising markets -- showed investors are still sensitive about the
possibility of deteriorating commercial relations between the
world's two largest economies.
Monday's volatile drops follow months of relative calm, after a
turbulent 2018 left investors scarred. Stocks, bonds and credit
markets rose in 2019, with U.S. equities recently touching all-time
highs. The S&P 500, for example, added 18% this year. Markets
observers had said optimism about U.S.-China trade talks helped
underpin that climb.
"This is not good news for Chinese companies that are already
dealing with headwinds from high indebtedness, slowing domestic
growth, and now tougher external conditions as well as the rest of
the world," said Trinh Nguyen, a Hong Kong-based senior economist
for emerging markets at Natixis. "Particularly for countries that
rely on China demand such as South Korea, Germany, and
Australia."
Indeed, nearly 200 companies in the Shanghai Composite fell by
the maximum 10%, while nearly 380 stocks in the Shenzhen Composite
were down by a similar measure.
Brent crude, the global oil benchmark, slid 1.9% to $69.53 a
barrel, while crude oil lost 2%.
"Trump's latest tweet on trade talks with China has sparked a
risk-off environment," said Giovanni Staunovo, a commodity analyst
at UBS in Switzerland, adding that concerns of slowing global
economic growth and subsequently lower oil demand weighed on
prices.
Investors flocked to safe assets, with gold adding 0.3% to
$1284.70 a troy ounce, and the Japanese yen adding 0.3% against the
greenback.
Later in the week, U.S. data on the trade deficit and inflation
are expected. Investors are eager for any signs that could dispel
or confirm whether the global economy is indeed slowing down or
not.
Elsewhere, the WSJ dollar index added 0.1%. Yields for U.S.
Treasurys were flat at 2.523%. Yields move inversely to prices.
--Saumya Vaishampayan and Shen Hong contributed to this
article.
Write to Joanne Chiu at joanne.chiu@wsj.com and Steven
Russolillo at steven.russolillo@wsj.com
(END) Dow Jones Newswires
May 06, 2019 04:40 ET (08:40 GMT)
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