Global stocks retreated on Friday, pulling Wall Street futures into the red and setting off a rally in government bonds, as investors reacted to weaker-than-expected factory data in China, escalating tensions in the Gulf region and a dismal sector outlook from one of the world’s biggest chipmakers.
Crude oil appreciates for the second day in a row following attacks on two oil tankers in the Gulf of Oman, which have raised fears of cutting crude oil flow through one of the key sea routes in the world. Tensions in the Middle East escalated after US President Donald Trump withdrew from the nuclear deal with Iran and again imposed sanctions that mostly affect the country’s exports.
Iran, which has distanced itself from previous attacks, said it was not worried about a war.
It is still unclear what caused the explosions, but Qatar has called for an international investigation of the attacks and to reduce tensions in the region.
Meanwhile, the US equity futures are largely still digesting the negative overnight newsflow, which includes an escalating standoff between Washington and Tehran in the Gulf region following a number of attacks on tankers in the world’s busiest commodity shipping lane. Moreover, the Broadcom CEO Hock Tan said “the US-China trade conflict including the Huawei export ban is creating economic and political uncertainty and reducing visibility” as the chipmaker reported a 10% slump in sales from its biggest business unit and narrow topline miss from its second-quarter earnings report. Broadcom shares were marked 9.24% lower in pre-market trading at 255.60 USD per share.
Asian markets recap
The main stock indexes of the Asia-Pacific ended the last trading session of the week mixed against the backdrop of the booming international tensions caused by the attack of two oil tankers in the Strait of Hormuz, one of the most important routes for the oil industry in the world.
In China, the mainland index Shanghai Composite fell by 28.77 points, or 0.99%, to 2,881.97 points. Hong Kong’s benchmark Hang Seng wiped out 203.83 points, or 0.75%, ending the day at 27,090.88 points. China’ industrial output slumps to a seventeen year low, triggering fresh concern for the impact of its trade dispute with the United States. China’s May industrial output reading slumped to a seventeen year low of +5%, official figures published Friday indicated, while fixed asset investment slowed and retail sales rebounded to an 8.6% growth rate. The data suggests a deeper-than-expected impact from China’s ongoing trade dispute with the United States, but also indicates a likely parallel slowdown in many of the world’s major economies.
In Japan, the blue-chip index of the Tokyo Stock Exchange, Nikkei 225, advanced by 84.89 points, or 0.40%, to 21,116.89 points. According to economists, Japanese exports are declining even faster in May, continuing the negative trend for the sixth consecutive month amid renewed escalating US-China trade war. Economists expect exports in May to fall by 7.7% YoY, and this will be the biggest decline since January. Consumer prices, which are another key indicator for market analysts, are likely to fall in May, pressuring the Bank of Japan to move away from its target of achieving a 2% inflation rate.
The South Korean index Kospi fell by 0.37% to 2,095.41 points.
Australian index S&P ASX 200 rose by 0.18% to 6,554.00 points.
European markets mid-session recap
European stock edged lower on Friday amid the disappointing economic data from China and tensions in the Middle East.
German index DAX 30 is trading down by 0.81% to 12,070.71 points at 14:10 GMT. The semiconductor stocks tumbled after Broadcom warned of a global slowdown in chip demand resulting from the US-China trade war. Infineon fell by 6%.
French index CAC 40 is down by 0.41% to 5,353.34 points. France reported its EU-harmonized consumer price index (CPI) for May at 0.9% year-on-year and 0.1% month to month, missing forecasts. Italian EU-harmonized CPI also came in at 0.9% year-on-year. Meanwhile, speaking at a news conference in Luxembourg on Friday, French Finance Minister Bruno Le Maire said Italy has only days to give answers to the EU over its rising debt, in order to avert disciplinary proceedings from the bloc.
British FTSE 100 inched lower by 0.37% to 7,341.30 points at mid-session trading. Royal Mail gained almost 3% after the former state monopoly’s annual report announced changes to its remuneration policy due to shareholder opposition. HSBC and Prudential were among the biggest drags on the blue-chip index, as the data once again underlined the knock on effects of China’s protracted trade dispute with the United States. Companies that book a major chunk of earnings in the greenback, such as BAT and Diageo, gave up 1% each.
Wall Street early-session recap
Wall Street stocks fell on Friday as investors digested a drop in semiconductor shares alongside weak data out of China.
The Dow Jones Industrial Average dipped 100 points as Intel and Apple lagged. The S&P 500 slipped 0.3% as the tech sector dropped 0.3%. The Nasdaq Composite slid 0.6%.
Chipmakers fell broadly after weak quarterly results from Broadcom. The VanEck Vectors Semiconductor ETF (SMH) fell 3%, led by a 8% plunge on Broadcom. The chipmaker posted weaker-than-expected revenue for the previous quarter and cut its guidance for 2019, citing “broad-based ” demand weakness and the U.S. crackdown on Huawei.
The US retail sales rose 0.5% in May, according to the Commerce Department. That was below the 0.6% gain expected by economists polled by Refinitiv. However, April retail sales were revised higher. May sales were also up 0.5% when excluding auto, gas building materials and food.