Global stocks fell again on Monday as investors were left guessing as to what comes next in the trade war between the United States and China.
The United States and China appeared at a deadlock over trade negotiations on Sunday as Washington demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any “bitter fruit” that harmed its interests.
Donald Trump’s economic advisor Larry Kudlow admitted that higher tariffs could affect US companies. On Sunday, responding to a question on the Fox News television channel, he was forced to admit that duties are not being paid directly by China, but by US companies importing Chinese commodities and goods.
Many economists claim that these duties certainly weaken China’s competitiveness, but they also mean rising prices for US companies and consumers.
Participants in the Sino-American trade talks met on Thursday and Friday in Washington but failed to reach a final agreement. The US accuses China of reversing a number of points discussed in previous consultations.
Donald Trump could expand duties to a further 325 billion USD of Chinese products after a tariff hike on Friday, the investors are again growing worried about what China’s response will be.
Asian markets recap
The main stock indexes in the Asia-Pacific region ended the first session of the week with decreases after Washington, on the order of President Donald Trump, increased customs duties on imports of Chinese goods with an annual turnover of 200 billion USD from 10% to 25%.
In China, the mainland index Shanghai Composite fell vt 1.21% to 2,903.71 points. The stocks of Alibaba Group depreciated by 0.58%, while those of PetroChina and China Petroleum and Chemical Corp lost 0.67% and 0.68%, respectively.
In Hong Kong, the stock exchange is closed for an official holiday.
On the Tokyo Stock Exchange, the blue-chip index Nikkei 225 wiped out 153.64 points, or 0.72%, closing the session at 21,191.28 points.
South Korean index Kospi dropped by 1.38% to 2,079.01 points.
At the same time, the Australian benchmark S&P ASX 200 reported a decline of 0.21% to 6,297.60 points. The shares of BHP Billiton and Westpac rose by 0.82% and 1.64%, respectively.
European markets mid-session recap
European shares extended losses early on Monday from the biggest weekly slump this year as the US-China standoff quelled hopes that the two largest economies will be able to resolve their trade dispute anytime soon.
German index DAX 30 is down by 0.74% to 11,970.95 points at 11:10 GMT. Daimler AG and BMW are putting their investments in Hungary on hold as the industry struggles with lower demand and the threat of higher auto tariffs by the United States. The stocks of both companies declined by 2.2% and 1.35%, respectively. The negative trend dragged Volkswagen down as well, declining by 1.2%. Among the biggest decliners was Thyssenkrupp, which dropped by 4%. The German industrial giant said it would seek partners for its steel operations after abandoning a European merger with India’s Tata Steel. It’s shares posted their best one-day surge on Friday, helped by short-covering on the news that the conglomerate plans to list its successful elevators business.
French index CAC 40 inched lower by 29.44 points, or 0.55%, to 5,297.99 points. The shares of Peugeot and Renault are trading with a decrease of 2.2% and 1.5%, respectively, while Airbus is down by 1.23%.
British FTSE 100 edged lower on Monday as Vodafone slipped after a report of a dividend cut, offsetting gains in oil heavyweights, while concerns over the stand-off in Sino-US trade negotiations continued to overshadow markets. The FTSE 100 was down by 0.16% to 7,191.89 points at mid-session, hitting a more than six-week low. Oil majors Shell and BP gained as oil prices rose on concerns about supply disruptions in the Middle East. The British Gas owner Centrica added 2% after it maintained its annual operating cash flow and net debt forecast despite a challenging trading environment.
Wall Street pre-session recap
Wall Street stock futures pointed to sharp losses on Monday as President Donald Trump ratcheted up pressure against China to make a trade deal, intensifying tensions between the world’s largest economies.
As of 7:23 a.m. ET, Dow Jones Industrial Average futures indicated a drop of about 300 points at the open. S&P 500 futures pointed to a loss of 1.2% while Nasdaq 100 futures indicated a drop of 1.6%.
Caterpillar and Boeing fell more than 1% in pre-market while Apple dropped more than 2.5%.
The calendar is thin with no economic data releases nor big corporate results due. Boston Fed President Eric Rosengren and Fed Vice Chairman Richard Clarida are due to speak at 9:10 a.m. ET.