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Global stock fall amid worsened trade rhetoric and collapse on Brexit

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The global stock edged lower on Friday amid worsened trade rhetoric and collapse on Brexit talks.

Trade fears ratcheted up after the US administration blacklisted the Chinese telecoms giant Huawei. The response from China was fast and the ruling Communist Party’s newspaper struck a defiant tone.

In Asia, most major indexes gained in Friday trade following overnight gains on Wall Street, but mainland Chinese shares tumbled amid ongoing tensions between Beijing and Washington. The negative mood transferred to Europe and Wall Street with all indexes moving into the red.

Meanwhile, the hopes that the UK.’s two largest political parties can hash out a Brexit agreement have ended. Labour leader Jeremy Corbyn told reporters Friday morning that talks had gone as far as they can go and his party will oppose Prime Minister Theresa May’s Brexit proposal.

Asian markets recap

Chinese indexes collapsed on Friday amid ongoing tensions between Beijing and Washington. The mainland benchmark Shanghai Composite index wiped out 2.48% of its value to 2,882.30 points, while the Shenzhen Component ended the day with a fall of 3.15% to 9,000.19 points. Meanwhile, Shenzhen Composite wiped out 3.25%.

In Hong Kong, the index Hang Seng declined by more than 1% in the last session of the week.

Investors had already evaluated that the two largest economies in the world would sign a trade agreement when they were surprised by the US decision to increase duties on Chinese imports with an annual turnover of 200 billion USD. China responded with imposing customs tariffs on US imports worth 60 billion dollars.

The US President Donald Trump worsened the situation by announcing a national economic emergency on Wednesday that allows the government to ban technology and services deemed “unacceptable risks”, including cyber espionage and sabotage. Chinese technology giant Huawei Technologies was forbidden to buy key US technologies without special approval, and its equipment was banned for use in US telecom networks because of national security concerns.

Meanwhile, Japanese blue-chip index Nikkei 225 rose by 0.89% to 21,250.09 points while the smaller index Topix index moved up by 1.09% thanks to the good performance of most sectors. Sony shares rose by 9.89% after the company redeemed shares worth 1.83 billion USD and signed a new partnership with Microsoft.

Nikkei 225

In South Korea, the local benchmark Kospi fell by 0.58% to 2,055.80 points.

The Australian index S&P ASX 200 advanced by 0.59% to 6,365.30 points.

European markets mid-session recap

German stocks edged lower with DAX 30 falling by 0.83% to 12,208.49 points at 10:00 GMT. Auto stocks lost 1.6%, with BMW shedding 5.7% as its shares traded ex-dividend.

French index CAC 40 is down by 0.47% to 5,422.45 points. The stocks of Renault and Peugeot are down by 1.37% and 0.7%. The fall in financial stocks was even worse with BNP Paribas and Societe Generale are trading with a decrease of 1.75% and 1.79%, respectively.

CAC 40

British index FTSE 100 is trading with a decline of 0.42% to 7,332.55 points at 10:00 GMT. The morning’s biggest loser was British tour operator Thomas Cook, which saw its shares plummet 30% by mid-morning, hitting their lowest since July 2012 and on track for the biggest one-day drop since November 2011. Citi analysts downgraded the company’s stock to “sell” after its latest profit warning Thursday. The low-cost airline EasyJet reported a pre-tax loss for the first-half of fiscal 2019 of 272 million GBP and the company’s shares climbed 3.3% by mid-morning trade. Metro Bank surged 19%, on course for its best day ever, after raising 375 million pounds of capital.

Wall Street pre-session recap

Stock index futures traded lower Friday as trade tensions between the US and China continue to dominate investor sentiment.

At 7:05 a.m. ET, Dow Jones Industrial Average futures indicated a drop of 105 points at the open. Futures for the S&P 500 and Nasdaq 100 also fell.

In corporate news, Amazon is leading a 575 million USD funding round for Deliveroo, taking the total the food delivery firm has raised to date up to 1.53 billion USD.

A number of Fed speeches are also scheduled for Friday. At 10 a.m. ET, Federal Reserve Vice Chair Richard Clarida will be speaking on the Fed’s review of its monetary policy strategy, followed by New York Fed President John Williams’ speech in New York at 11:15 a.m. ET, and Dallas Fed President Robert Kaplan’s speech at 1:10 p.m. ET.