Investors’ optimism returned and the latest global stocks sell-offs eased. The sentiment of the markets improved after the US President Donald Trump said that he will meet Chinese President Xi Jinping next month, giving fresh hopes for reaching a trade deal between the two countries.
Yesterday, Wall Street indexes recorded their worst day of the year after China announced it would impose duties on US imports worth 60 billion USD, which will come into force on June 1. The product range includes a number of goods from the US agricultural sector. At the end of last week, the US President Donald Trump raised customs tariffs on Chinese imports worth 200 billion USD from 10% to 25%, which diminished investor expectations for a recent trade deal between the world’s two most powerful economies.
On Monday evening, Donald Trump said that the White House would report whether the trade talks between Beijing and Washington had been successful within three or four weeks. The US Finance Minister Steven Mnuchin told that the two sides are still “negotiating”.
Barclays analysts say that negotiations between the US and China have been breached because of the differences that the negotiating parties have had on a number of important issues. According to them, the US will also impose duties on more Chinese goods, which can cover all imports from the Asian country to the US market.
“We estimate that the direct economic losses to the US will reach 0.2-0.3% of gross domestic product”, said analysts pf Barclays.”The indirect effects of losses on business and consumption confidence, or by increasing volatility in the financial market, can easily lead to larger decreases in production and the labor market”, added they.
Asian markets recap
Most of the stock exchanges in the Asia-Pacific region ended today’s trading session with declines amid the escalation of the Sino-American trade war, although being just a step ahead of reaching a trade agreement.
On the Shanghai Stock Exchange, the mainland index Shanghai Composite wiped out 0.69% to 2,883.61 points. Hong Kong’s index Hang Seng reported a decline of 489.86 points, or 1.72%, to 28,060.38 points. The shares of the technology company Tencent fell by more than 2%.
In Japan, the blue-chip index Nikkei 225 fell by 124.05 points, or 0.59%, to 21,067.23 points. The SoftBank Group declined by more than 5%.
South Korean index Kospi advanced slightly by 0.14% to 2,081.84 points. The shares of Samsung Electronics and the manufacturer of microprocessors SK Hynix were able to recover from the losses during the first hours of the session.
In Australia, the local index S&P ASX 200 fell by 57.70 points, or 0.92%, to 6,239.90 points.
European markets mid-session recap
European shares bounced on Tuesday after hitting two-month lows a day earlier as comments overnight from Washington and Beijing helped soothe investor worries about a deepening trade row and defy a heavy sell-off on Wall Street.
The German index DAX 30 is 0.44% higher to 11,929.36 points at 10:00 GMT, while the European auto sector, which is highly dependant on exports for growth and one of the hardest hit on Monday, also rebounded 1%. The stocks of pharmaceutical giant Bayer sank by 2.2% to seven-year lows after a jury awarded more than 2 billion USD to a California couple in the largest US jury verdict against the company over allegations its Roundup weed killer causes cancer. The chemical company K+S rallied by 4.3% after positive earnings.
The French index CAC 40 rose by 0.95% to 5,312.67 points. Renault shares tumbled 2.5% after its Japanese partner, Nissan Motor Co, flagged its weakest annual profit in more than a decade, forecasting a 28% drop in earnings. Banks, which have been hurt by new concerns over the economy caused by the unexpected return of trade tension between the world’s two biggest economies, rose slightly with BNP Paribas and Societe Generale adding 0.59% and 0.22%, respectively. The stocks of aircraft manufacturer Airbus have a more significant appreciation of 2.87%.
Britain’s FTSE 100 bounced back as investors returned to equities after US President Donald Trump backed trade discussions with China to be successful, while baker Greggs hit a life-high on brighter 2019 prospects. The blue-chip index was up by 0.81% to 7,221.60 points at 10:00 GMT. UK unemployment rate was estimated at 3.8% for the first three months of 2019 while average weekly earnings rose 3.3% year-on-year. The Office for National Statistics noted that the unemployment rate has now been lower since the October – December quarter of 1974. DCC PLC leads the advance with its shares rising by 2.7% after its well-received full-year results. Vodafone fell at the open after the group slashed its dividend, reversing a pledge to maintain one of the biggest payouts in Britain so it can build 5G networks and complete its looming acquisition of Liberty Global assets.
Wall Street pre-session recap
The US equity futures were in the green in premarket trading Tuesday as investors weighed the impact of the escalating trade war between the United States and China.
As of 6 a.m. ET, Dow Jones Industrial Average futures indicated a positive open of more than 100 points. S&P 500 and Nasdaq futures also pointed to early gains.
The positive pre-market trading comes after real nightmare yesterday when Wall Street indexes recorded their worst day of the year.