• Tuesday, July 16, 2024
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BusinessDay

Markets jolted by rising concerns over global trade

global trade

Markets were jolted after Donald Trump suggested a trade deal with China could be delayed until after the US presidential election in November next year.

Speaking in London during a press conference with Nato secretary-general Jens Stoltenberg, Mr Trump said he had “no deadline” for getting a deal done, adding: “In some ways I think it’s better to wait until after the election.”

China’s currency slipped directly following the comments, as did government bond yields and equity markets on both sides of the Atlantic.

The S&P 500 was down 1.3 per cent shortly after opening bell on Tuesday, again putting the index on course for its biggest one-day drop in about two months, and having fallen 0.9 per cent on Monday. The Nasdaq Composite sank 1.3 per cent and the Dow Jones Industrial Average fell 1.2 per cent.

Declines in Europe picked up steam. The broad Stoxx 600 was down 1.1 per cent, France’s Cac 40 sank 1.3 per cent and London’s FTSE 100 tumbled 1.9 per cent. Germany’s Dax clung to a 0.1 per cent decline.

“As we get closer to the December 15 deadline for new tariffs being imposed on China, risk markets will likely become increasingly nervous as each day passes if we get no news confirming either a date to sign a phase one deal or a delay in these tariffs being imposed,” Mohammed Kazmi, Portfolio Manager at UBP, said.

The offshore renminbi, the version of the Chinese currency which international investors can access outside of China, weakened 0.4 per cent to 7.0682 to the dollar.

In fixed income, the yield on US 10-year Treasuries gave up ground to trade down 7.4 basis points at 1.7603 per cent on the day as investors retreated into the debt. Gold, seen as a haven asset sought out by investors in times of market turbulence, traded 1 per cent higher.

“The China trade deal is dependent on one thing: Do I want to make it?” said Mr Trump. “ . . . we’re doing very well with China right now and we can do even better.”

The comments come as Mr Trump reignites global trade tensions more broadly, reimposing tariffs on some metal imports from Brazil and Argentina and threatening to impose duties on French products.

Separately, Beijing also upped the trade war ante as it retaliated against Mr Trump’s decision to sign legislation supporting protesters in Hong Kong by barring US navy ships from visiting the territory and slapping sanctions on four non-governmental organisations. Mr Trump said that signing the legislation did not increase the chances of agreeing a so-called “phase one” trade deal.

Asia-Pacific stocks closed down in earlier trading. Hong Kong’s Hang Seng ended the session down 0.2 per cent having slid as much as 1.4 per cent earlier. The CSI 300 of Shanghai- and Shenzhen-listed stocks finished up 0.4 per cent after recovering from an early fall. Tokyo’s Topix lost 0.5 per cent.