Global stocks opened mostly lower on Monday, as investors continued to weigh the impact of souring US-China trade negotiations. Chipmakers are the biggest losers during the day on fears of disruption to their client base.
Meanwhile, the US President Donald Trump signaled that he was clearly in no hurry to return to talks with Beijing, paving the way for a new escalation in trade tensions.
“We’re taking billions of dollars”, said Donald Trump after being asked about the development of the trade war. “Obviously, China is not doing as well as we do”, added the president, stressing that he is “very happy with the trade war and because of it China will not become the world’s largest economic power”.
Earlier today, it became clear that the US technology company Google has suspended part of its business relationship with telecom giant Huawei after the Trump administration imposed bans on the largest Chinese technology company. Google will no longer have business with Huawei, which require the transfer of hardware and software products, except for those covered by open source licenses. The next version of Huawei smartphones outside of China will lose access to popular apps and services, including the Google Play Store and the Gmail app.
Asian markets recap
The main stock indexes in the Asia-Pacific region ended the first trading session of the week without a single direction due to the continuing US-China trade war, which raised investors’ concerns about the stability of the global economy.
In Japan, the blue-chip index of the Tokyo Stock Exchange, Nikkei 225, added 51.64 points, or 0.24%, to 21,303.73 points after it became clear that Japan’s economy grew by 2.1% in the first quarter of the year, surpassing expectations market experts. However, due to the continuing trade war between Beijing and Washington, the country’s imports and exports fell by 4.6% and 2.4%, respectively.
In South Korea, the index Kospi fell by a minimum of 0.09 points.
Australian index S&P ASX 200 advanced by 110.80 points, or 1.74%, to 6,476.10 points after the Liberal-national coalition of Prime Minister Scott Morrison won the parliamentary elections in the country. The shares of Commonwealth Bank of Australia and National Australia Bank grew by 6.15% and 7.61% respectively, while those of Australia and New Zealand Banking Group and Westpac gained respectively 7.33% and 8.38%.
In India, the local benchmark Nifty 50 rose by more than 1.5% after early parliamentary elections in the country showed a victory for the party of the Prime Minister Narendra Modi. The index rose sharply while Indian Rupee was the best performing in Asia.
In China, stock indices ended into the red. The benchmark Shanghai Composite fell by 0.40% to 2,870.88 points, while the Hong Kong’s index Hang Seng wiped out 122.20 points, or 0.44%, to 27,824.26 points.
European markets mid-session recap
European markets edged lower on Monday after Ryanair profit warning pressured airline and travel stocks, while chipmakers slid after Infineon halted shipments to Huawei amid US-China trade tensions.
German index DAX 30 is trading lower by 80.16 points, or 0.65%, to 12,158.78 points at 09:40 GMT. Deutsche Bank shares came under pressure after the New York Times reported that anti-money laundering specialists at the bank recommended in 2016 and 2017 that multiple transactions involving entities controlled by US President Trump and his son-in-law Jared Kushner be reported to a federal financial-crimes watchdog. The stocks of the semiconductor manufacturing company Infineon fell by 4.7% after halting shipments to Huawei. Automakers are also deep into the red with Daimler, Volkswagen, and BMW wiping out between 0.8% and 1.0% from their market cap.
French index CAC 40 inched lower by 0.85% to 5,392.15 points at mid-session trading. Chipmakers were most seriously affected with the stocks of STMicroelectronics declining by 8.2%. The stocks of Renault and Peugeot fell by 0.5-0.7%, while aircraft manufacturer Airbus dropped by 0.8%.
British index FTSE 100 fell by 0.34% to 7,323.82 points amid the weak results from Ryanair, which triggered a sell-off in airlines across the board. Ryanair’s London-listed stock fell 6% to a four-month low after the low-cost airline reported its weakest annual profit in four years amid struggles with overcapacity, Brexit and delays in delivery of the Boeing 737 MAX. The poor reading dragged down British Airways-owner IAG, easyJet and Wizz Air. However, Britain’s main share index found support from oil majors on Monday after a signal from OPEC on sticking to production cuts. Utilities National Grid and Centrica were among top gainers after being hammered last week when the opposition Labour Party announced plans to take energy networks back into state ownership if elected.
Wall Street pre-session recap
Wall Street stock index futures barely moved Monday morning, as concerns about an intensifying fallout from a US crackdown on Huawei weighed on market sentiment.
At around 05:45 a.m. ET, Dow futures indicated a nearly flat open. Futures on the S&P and Nasdaq were both seen slightly lower.
No major economic data reports were expected on Monday.
In corporate news, Pinduoduo, Game Technology, and Qudian are among some of the companies scheduled to report their latest quarterly figures before the bell.