Global stocks edged lower amid trade tensions and jumping Chinese inflation | Finance and Markets

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Global stocks edged lower on Wednesday, a day after Wall Street indexes broke a weeklong winning streak amid lingering trade tensions and questions over the direction of Federal Reserve policy.

Asian stocks ended the trading session mostly into the red, while European equities are trading slightly lower at mid-session. The Wall Street futures pointed to opening declines of 0.2%, extending yesterday’s modest losses.

The focus of investors is turned to another controversial statement of US President Donald Trump. On Tuesday, he once again criticized the Federal Reserve on Twitter for the high interest rates, pointing out that the Euro and some other currencies are “devalued” against the US dollar.

Donald Trump administration signalled last month that it wanted to turn the global currency market worth 5.1 trillion USD per day in the next battlefield in its trade war. This includes a US Department of Commerce plan that will allow the country to impose “countervailing” duties on countries that are believed to actively devalue their currency to stimulate exports.

A key topic for investors and traders is the rising inflation in China. Inflation rose to 2.7% YoY, according to the National Statistics Office. In April, growth was 2.5%. Producer prices in the People’s Republic grew in May by 0.6% on an annual basis, as were analysts’ expectations. In April they jumped by 0.9% compared to the previous year.

Asian markets recap

The main stocks indexes in the Asia-Pacific region ended their positive trading sessions streak on Wednesday against a rise in consumer prices in China to a 15-month high.

The Shanghai Composite index fell by 0.56% to 2,909.38 points. Earlier today, it became clear that Chinese inflationary pressures continued to rise in May, as the shock of sluggish supply has sharply raised food costs. Producer prices in the People’s Republic grew in May by 0.6% on an annual basis, as were analysts’ expectations. In April they jumped by 0.9% compared to the previous year. On the other hand, Chinese pork prices grew by 18.2% compared to the previous year, vegetables grew by 13.3% and fruit – by 26.7%. Food prices rose by 7.7% from the previous year, contributing to 1.48 percentage points growth of the CPI.

Shanghai composite

In Hong Kong, the index Hang Seng reported a decline of 522.71 points, or 1.88%, to 27,266.63 points. Hundreds of thousands of protesters blocked the streets of the special administrative region of the People’s Republic of China for a second day to protest against the adoption of a new law that would allow extradition to mainland China. Thousands of demonstrators besieged the Hong Kong Legislative Council and blocked the entrance to the parliament, which was planning to discuss the bill on Wednesday. So far, the meeting of MPs has been postponed. Protesters took up the streets around the complex and removed security barriers, although the police mobilized a large contingent of security forces. The controversial law will allow the authorities in Hong Kong to transmit suspicious persons to the Communist People’s Republic at the request of the Chinese authorities. But critics say China’s judicial system is not independent, does not meet international standards, and pursues politically disaffected people. They are also threatened with torture and ill-treatment, opponents of the law say.

In Japan, the blue-chip index of the Tokyo Stock Exchange, Nikkei 225, wiped out 74.56 points, or 0.35%, ending the day at a level of 21,129.72 points. The stocks of Fast Retailing and Nisshin Seifun Group performed strong, adding 2.4% and 2.4% each. However, Advantest and Yahoo Japan were among the biggest losers, wiping out 4.66% and 3.18% from their market cap.

In South Korea, Kospi declined by 0.14% to 2,108.75 points. The stocks of LG Display dropped by 2.3%, while Samsung Electronics declined slightly by 0.6%.

Australian index S&P ASX 200 also reported a decline of 0.04% to 6,543.70 points. The best performers of the session were Emeco Holdings Ltd (+14.24%), Ausdrill Ltd (+6.57%) and Saracen Mineral Holdings Ltd (+6.44%), while among biggest losers were Challenger Ltd (-3.53%) and Bapcor Ltd (-3.24%).

European markets mid-session recap

European stocks traded lower Wednesday after the U.S. and China resumed tough stances in their ongoing trade war.

The pan-European Stoxx 600 dropped 0.5% to 378.97 points at 11:30 GMT, with oil and gas stocks leading losses with a 1.5% decline, while banks fell 1.2%. Media stocks were the strongest performer with a 0.7% gain.

German index DAX 30 edged lower by 0.44% to 12,102.63 points at mid-session trading. Shares of the local publisher Axel Springer soared 11.9% in early deals after US private equity firm KKR offered to buy out its minority shareholders. Carmakers Daimler and Volkswagen are down by 0.9% each, while the chemical giant BASF wiped out 1.35% of its market cap.

French index CAC 40 is trading lower by 0.6% to 5,375.35 points. French President Emmanuel Macron said Tuesday that he would support German Chancellor Angela Merkel if she seeks to succeed Jean-Claude Juncker as president of the European Commission. Meanwhile, French technology giant Dassault Systemes has agreed to acquire Medidata Solutions in an all-cash deal worth 5.8 billion USD on an enterprise value basis. Dassault shares fell 1.3% at noon. The stocks of carmakers, Renault and Peugeot, wiped out 1.2% each, while banking stocks sank even lower with Societe Generale and BNP Paribas declining by 1.9% and 1.6%, respectively. The stocks of aircraft manufacturer Airbus fell by 1.7%.

french stocks

British index FTSE 100 is down by 0.71% to 7,345.67 points at Wednesday noon. Financial stocks were the biggest drags on the blue-chips, while consumer goods firm Reckitt Benckiser fell after naming PepsiCo executive Laxman Narasimhan to succeed outgoing chief executive officer Rakesh Kapoor. British American Tobacco falling 2.5% despite affirming its annual targets in what seemed to be a generally positive trading update. Pendragon lost a quarter of its value and slumped to a more than six-year low, as it warned that significant declines in new car and used car registrations would lead it to report a pre-tax loss for the current year. Online fashion group Boohoo, operating in a tough retail market that saw hits to fashion retailer Ted Baker and fast fashion chain Quiz Plc on Tuesday, slipped 3% despite posting robust quarterly sales growth.

Wall Street pre-session recap

Wall Street stock index futures slipped on Wednesday as Wall Street took a pause following a strong rally to kick off June.

At 7:15 a.m. ET, Dow Jones Industrial Average futures indicated a loss of 61.5 points at the open. Futures on the S&P 500 and Nasdaq 100 also fell.

Wednesday’s declines come after muted trading action in the previous session. The Dow closed marginally lower, snapping a six-day winning streak.

Investors are likely to closely monitor Consumer Price Index (CPI) data for May at around 8:30 a.m. ET, with core CPI excluding food and energy for May due at the same time. The latest Federal Budget figures will be released slightly later in the session.