Trade war concerns and profit-taking send European stocks lower
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LONDON: Global stock markets eased back on Thursday (May 3) as concerns about trade wars nibbled at investor confidence and bond yields rose."Nerves before US-China trade talks and a little reverberation from yesterday's meeting of the Federal Reserve have kept markets on edge," said market analyst Jasper Lawler at London Capital Group.
"As equites fell out of favour, bond yields rose," he added.The main indices in London and Paris shed 0.5 per cent, while Frankfurt closed down 0.9 per cent.Meanwhile on Wall Street, the Dow was down 1.4 per cent in midday trading.CMC Markets UK analyst David Madden said there was also some profit-taking.
"Some major European indices hit their highest levels since February yesterday, and investors are now locking in some profits," he said in a note to clients."Traders took their cues from Asia overnight and decided to exit the equity markets, partially driven by higher yields on government bonds," he added.The yield on the 10-year US government bond briefly moving above 3.0 per cent last week also caused many investors to reconsider their portfolios. Many investors consider rates of return above 3.0 per cent on safe government bonds as sufficiently attractive to lessen their exposure to risky stocks.The tariff spat between the world's two biggest economies returned to the fore as a US delegation - including Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross - sit with Chinese officials in Beijing, with both sides reducing expectations of a quick resolution.
TRADE WAR WORRIESTrading floors have been swamped with worry since US President Donald Trump began this year threatening a series of tariffs on billions of dollars worth of goods, with an emphasis on China, which he claims is gaining an unfair trade advantage over the United States.Both sides were tempering expectations for the gathering with Hua Chunying, a spokeswoman for China's foreign ministry, telling reporters it was "not realistic to resolve all issues through only one round of negotiations".While China has announced tit-for-tat moves, it has also unveiled a series of measures placating the White House - but there are still worries the situation could spiral into a potentially damaging trade war."When you think about the things that have been weighing on the market ... I think the one that is really weighing the most heavily is trade and that's why the market tends to swing the most violently on every new piece of news," Michael Jones, chairman of RiverFront Investment Group, told Bloomberg TV.European investors didn't have any rosy economic data to cheer to improve their sentiment either."Today's European economic data were far from impressive," said Fawad Razaqzada at Forex.com.Although the EU is sticking to its projections of solid growth this year and next, the bloc also identified trade protectionism as the biggest threat to the outlook.A survey of British purchasing managers also disappointed investors, Razaqzada said.Key figures around 1530 GMT:New York - Dow: DOWN 1.4 per cent at 23,588.83London - FTSE 100: DOWN 0.5 per cent at 7,502.69 points (close)Frankfurt - DAX 30: DOWN 0.9 per cent at 12,690.15 (close)Paris - CAC 40: DOWN 0.5 per cent at 5,501.66 (close)EURO STOXX 50: DOWN 0.8 per cent at 3,525.74Hong Kong - Hang Seng: DOWN 1.3 per cent at 30,313.37 (close)Shanghai - Composite: UP 0.6 per cent at 3,100.86 (close)Tokyo - Nikkei 225: Closed for a public holidayEuro/dollar: UP at US$1.1960 from US$1.1944 at 2100 GMTPound/dollar: DOWN at US$1.3550 from US$1.3568Dollar/yen: DOWN at 108.97 yen from 109.91Oil - Brent North Sea: DOWN 28 cents at US$73.08 per barrelOil - West Texas Intermediate: DOWN 30 cents at US$67.63 per barrel
Source : http://www.channelnewsasia.com/news/business/trade-war-concerns-and-profit-taking-send-european-stocks-lower-10200406