Global stocks edged lower on Tuesday for a third consecutive day, as a stinging warning came from German chemicals giant BASF about the effects of the global trade war, while the traders hedged bets on a hefty US interest rate cut later this month.
Also, the negative performance of Apple during the latest Wall Street trading session also affected the stocks of its suppliers and the semiconductor manufacturers as a whole.
Investors continue to look forward to Wednesday’s upcoming speech of the US Federal Reserve Governor Jerome Powell. He will comment on recent US labor market data that outpaced market expectations and darkened the hopes of shrinking key interest rates at the end of the month.
Asian markets recap
Most of the stock indexes in the Asia-Pacific region ended today’s trading session with declines as economists forecast a slowdown in the growth of the Chinese gross domestic product to 6.2%.
In China, the mainland index Shanghai Composite dropped by 0.22% to 2,927.03 points. The declined comes amid the expectations of the economists for a slowdown in the Chinese gross domestic product in Q2 2019 to 6.2%. The main reason for the forecast is the negative impact that the trade war will continue with the United States on the strongest Asian economy.
Hong Kong’s benchmark Hang Seng dropped by 196.32 points, or 0.69%, to 28,135.37 points. Hong Kong’s extradition bill, which sparked the biggest political crisis for decades, was officially revoked. The proposal provided an opportunity for the extradition of Hong Kong nationals to be sued mainland China. This prompted huge protests, which carried violence.
In Japan, the blue-chip index Nikkei 225 30.80 points, or 0.14%, to 21,565.15 points. The best performers of the session on the Nikkei 225 were Yahoo Japan (+4.38%), Familymart Ltd (+4.1%) and JX Holdings (+2.73%), while on the flipside were Taiyo Yuden Co (-3.96%), Suzuki Motor (-3.32%) and Yaskawa Electric Corp (-3.22%).
In South Korea, the local index Kospi slid by 0.59% to 2052.03 points. South Korean chip makers and Japanese chemical industry suppliers are trying to bypass the tighter export control imposed by the Japanese side, amid a sudden escalation of the bilateral diplomatic dispute between Seoul and Tokyo. Last week, Japan said it would stop the preferential treatment of South Korea’s shipments for materials related to chip technology, requiring exporters to get permission for each delivery. This permission takes about 90 days. Tokyo’s Ministry of Economy, Trade and Industry has imposed tougher restrictions on exports of raw materials such as fluorinated polyamide and hydrogen fluoride. They are important in the production of chips and other industrial processes where Japanese suppliers have a dominant market share. Restrictions will pose a serious threat to some of the most important South Korean companies, including Samsung and its major competitor SK Hynix. The escalating dispute threatens to cause chaos in the supply chain. Despite the tension, the shares of Samsung Electronics rose by 1.58%, while those of SK Hynix added 3.56%.
Australian index S&P ASX 200 declined by 0.10% to 6,665.70 points.
European markets mid-session recap
European stocks fell on Tuesday amid negative corporate news, which worsened the sentiment of investors. The pan-European index Stoxx 600 index is down by 0.86% to 386.55 points. Autos and chemicals stocks each shedding 2.2% as the vast majority of sectors traded in negative territory.
German index DAX 30 declined by 156.50 points, or 1.25%, to 12,387.01 points at 10:00 GMT. The stocks of the chemicals giant BASF are down by 6% after on Monday the company warned that profit would fall well below forecasts for the second quarter of the year, and warned of a slowdown in the automotive sector. The news also impacted Bayer spin-off Covestro, which fell 5.1%. Meanwhile, the stocks of Deutsche Bank continued to tumble a further 5.0% Tuesday after news that workers began to leave offices in New York, London, Sydney and Tokyo Monday as the German lender started to slash 18,000 jobs in a 7.4 billion EUR (8.3 billion USD) restructuring.
French index CAC 40 is down by 0.60% to 5,555.83 points at mid-session trading. The automotive supplier Faurecia tumbled 5.5% after the warning of BASF. The stocks of carmakers are deep into the red with Renault declining by 3.2% and Peugeot down by 2.7%.
British index FTSE 100 edged lower by 0.18% to 7,535.36 points. The mining stocks fell amid easing copper prices, while the software firm Micro Focus dropped after its half-year results. Shares of Melrose Industries fell 6.7%, heading for their worst day in five years. However, online supermarket Ocado saw its shares rise of 5.2% after issuing a confident outlook with its first-half results.
Wall Street pre-session recap
Wall Street stock index futures were lower on Tuesday morning, as traders waited to hear from Federal Reserve Chairman Jerome Powell.
At around 06:00 a.m. ET, Dow futures slipped 124 points, indicating a negative open of more than 131 points. Futures on the S&P and Nasdaq were also lower, pointing for negative open by 14.35 points and 54.29 points, respectively.
A new NFIB survey will be out at 6 a.m. and a new JOLTS report will be released at 10 a.m. ET.
In the corporate world, PepsiCo and Levi Strauss will update investors on their latest performance.