Global stocks sank on Monday on the background of renewed trade tensions and investors’ withdrawal from risky assets. On Asian markets, the main indexes fell deep into the red and during the European trading session, the situation did not improve.
US President Donald Trump announced on Thursday that he will impose special duties on Chinese imports worth 300 billion USD on September 1. China announced countermeasures. This fuels the fear of a global recession.
Trade uncertainty sent the Chinese yuan lower on Monday, with the currency breaching a key psychologically important level of 7 yuan-per-dollar. The level was last breached during the global financial crisis in 2008, according to Reuters. The onshore yuan last changed hands at 7.0289, while its offshore counterpart traded at 7.0843. This might cause another economic war between the US and China – currency war.
Asian markets recap
Concerns about a further escalation in the US-China trade war also weighed on Asian markets earlier this week. Investors are stepping away from stocks and seeking shelter in safe havens, such as the Japanese yen, gold, and government bonds. The MSCI index for the Asia-Pacific region, excluding Japan, collapsed by about 2%.
In China, the mainland index CSI 300, which covers the largest 300 companies in the country, fell by 1.57% to 3,688.50 points. Meanwhile, Shanghai Composite dropped by 46.34 points, or 1.64%, to 2,821.50 points. In Hong Kong, against the backdrop of the political crisis, recessions are even more severe, Hang Seng wiped out 2.9% to 26,138.50 points. Prime Minister Carrie Lam said on Monday that her government is determined to enforce law and justice and restore confidence. Observers say the protests are Hong Kong’s worst political crisis since its return to China 22 years ago.
In Japan, the blue-chip index Nikkei 225, which collapsed on Friday with over 2%, lost another 1.74% today and fell to 20,720.29 points. In addition to the trade war, it has also suffered from the strong yen, which has boosted exports of Japanese export-oriented enterprises. Currency is considered as a safe haven. The best performers during the session were Toyobo Co (+5.01%), Olympus Corp (+4.34%) and Subaru Corp (+3.89%), while on the flipside were Kobe Steel (-15.02%), Yahoo Japan Corp (-12.81%) and NTT Data Corp (-7.48%).
In South Korea, the local index Kospi fell by 2% to its lowest level since December 2016.
In Australia, the index S&P ASX 200 wiped out 1.90% to 6,640.30 points. Resolute Mining and Oil Search Ltd added 4.3% and 3.3%, respectively.
European markets mid-session recap
European shares joined a China-driven global sell-off on Monday, dragged down heavily by commodity-linked stocks as anxiety over trade frictions with the United States sent the country’s yuan below 7 per dollar for the first time in a decade. The pan-European Stoxx 600 index fell 1.6% to 372.14 points, adding to a 2.5% fall on Friday, its worst day so far in 2019, as traders dumped stock investments in favour of perceived safe-havens like government bonds.
German index DAX 30 wiped out 153.39 points, or 1.3%, to 11,719.05 points at 10:00 GMT. Shares in the group Metro fell by 3% after Czech businessman Daniel Kretinsky’s investment vehicle denied reports it was considering raising its takeover offer price for the German retailer and wholesaler. Evonik shares slipped 2.6% after the US Federal Trade Commission said on Friday it was suing to stop the German chemical maker’s proposed purchase of rival hydrogen peroxide maker PeroxyChem Holding Company.
French index CAC 40 is down by 1.82% to 5,261.41 points. Total SA shares fell nearly 1.5%. The integrated oil and gas firm has agreed to sell a 30% interest in Société des Transports Pétroliers par Pipelines (Trapil) to Pisto SAS for 260 million euros. Luxury retailer LVMH, which has heavy exposure to China, lost 3%.
British index FTSE 100 declined by 1.70% to 7,280.93 points at mid-session trading. Retailer Marks & Spencer and online supermarket Ocado gave up about 2.5% each after sealing a deal to set up an online food venture that will result in the termination of Ocado’s current deal with Waitrose.
Wall Street pre-session recap
Futures on Monday pointed to a sharply lower open for US stocks, but Dow futures pulled off their session lows of more than 360 points.
Dow Jones Industrial Average futures implied an opening drop of 272 points on Monday as of 6:10 a.m. ET. Futures also pointed to opening declines for the S&P 500 and Nasdaq on Monday.
The US bonds also saw large movements, with the yield on the closely watched 10-year note falling to as low as 1.768%.