Global Stocks Dip as Trade Hopes Falter
By Will Horner
Global stocks skidded on Friday, ending a recent rally after
comments from Chinese officials suggested an uncertain course ahead
for trade talks with the U.S.
In Europe, the pan-continental Stoxx Europe 600 fell 0.6% in the
opening minutes, putting it on course to cap a three-session run of
London's FTSE 100 fell 0.5%, less than its counterparts in
Frankfurt and Paris, as stocks were supported by a weaker British
pound, which has fallen against the dollar all week amid growing
Brexit uncertainty. The British currency and the country's
blue-chip index often move in opposite directions.
Shares in food-delivery businesses slipped after Amazon.com said
it would invest in the unlisted U.K. startup Deliveroo. British
rival Just Eat saw shares fall 7%, while Takeaway.com and Delivery
Hero shares fell around 4%.
Chinese indexes led Asian markets lower, with the Shanghai
Composite falling 2.5% and Hong Kong's Hang Seng falling 1.1%.
Japan's Nikkei bucked the trend with a rise of 0.9%.
On Wall Street, futures pointed to opening drops for both the
S&P 500 and the Dow Jones Industrial Average of 0.4%. The
S&P 500 rose 0.9% Thursday, while the Dow climbed 0.8% as
robust earnings helped offset economic growth concerns.
Investors continued to focus on comments from Washington and
Beijing on the state of trade talks after new U.S. tariffs marked a
re-escalation of tensions and upended hopes the dispute was nearing
On Thursday, China's Commerce Ministry contradicted comments
from Treasury Secretary Steven Mnuchin that U.S. negotiators will
hold further talks in Beijing at "some point in the near
A Chinese spokesman said China "doesn't have a grasp on the U.S.
side's plans to come to China for negotiations." He then said the
U.S.'s escalation of tariffs had "severely hampered" talks.
"The resurgent trade war is shaking markets," said David
Folkerts-Landau, Group Chief Economist at Deutsche Bank, adding
that further tariffs would prompt a large market correction. "There
is also the possibility of further escalation by the U.S. or a more
combustible retaliation from China, either of which would further
inflame tensions and elevate risks."
The tensions also saw the U.S. dollar on Friday climb 0.4%
against the Chinese yuan.
Analysts at UniCredit also pointed to reports in Chinese state
media Friday which further questioned the likelihood of more talks.
"In our view, the next two weeks...will be very important regarding
whether the situation shows signs of an imminent de-escalation,"
they wrote in a note.
The rising likelihood of national elections in the U.K. was also
concerning European investors after Prime Minister Theresa May on
Thursday set out plans for her resignation. Investors suspect her
replacement would be more in favor of a disruptive exit from the
European Union, something most economists warn would harm trade and
the nation's economy.
The British pound has fallen against the dollar for
five-straight sessions this week as questions over Mrs. May's
succession have grown. It was last down 0.1% at $1.2782.
U.S. government bonds were little changed, with the yield on the
benchmark 10-year Treasury note at 2.387%. The WSJ Dollar Index,
which tracks the dollar against a basket of currencies, was also
In commodities markets, Brent crude oil fell 0.4% to $72.90 a
barrel, while gold rose 0.1% at $1,289.00 an ounce.
(END) Dow Jones Newswires
May 17, 2019 05:53 ET (09:53 GMT)
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