Global stocks mixed as trade war fears deepen
BEIJING — Asian stocks fell while European markets opened higher Tuesday after China let its currency sink further and halted purchases of U.S. farm goods, fueling fears about global damage from its trade war with President Donald Trump.
Benchmarks in London and Frankfurt advanced in early trading while markets in Shanghai, Tokyo and Hong Kong closed lower.
Beijing allowed its yuan to fall to 7.0562 to the dollar after it broke through the politically sensitive level of seven to the U.S. currency on Monday following Trump’s threat of tariff hikes on an additional $300 billion of Chinese imports. The Commerce Ministry suspended promised purchases of American farm products.
On Monday, the U.S. Treasury Department officially labeled Beijing a currency manipulator, a status that opens the way to possible additional sanctions.
The U.S. move “will likely contribute to a hardening of positions” in trade talks, Martin Petch of Moody’s Investors Service said in a report.
“Unless negotiations between the U.S. and China resume rapidly, this latest development is likely to create negative spillover effects in both China, the U.S. and globally, and particularly in Asia,” he said.
London’s FTSE 100 was 6 points higher at 7,230.28 in early trading and Germany’s DAX gained 0.5% to 11,715.11. France’s CAC 40 rose 0.7% to 5,277.67.
In Asia, the Shanghai Composite Index declined 1.6% to 2,777.56 and Tokyo’s Nikkei 225 gave up 0.6% to 20,585.31. Hong Kong’s Hang Seng shed 0.7% to 25,976.24 and Seoul’s Kospi was off 1.5% at 1,917.50.
Sydney’s S&P-ASX 200 retreated 2.4% to 6,478.10 while India’s Sensex gained 1.4% to 37,218.55. Markets in Taiwan, New Zealand and Southeast Asia also declined.
On Wall Street, futures for the Standard & Poor’s 500 index and Dow Jones Industrial Average were up 0.8%.
On Monday, U.S. stocks suffered their biggest loss since December. Investors already were unnerved about a cooling global economy and falling U.S. corporate profits.
The S&P 500 dropped 3% and the Dow lost 2.9%. The Nasdaq composite fell 3.5%.
Technology stocks bore the brunt of Monday’s selling. Apple slid 5.2%. It depends on Chinese factories to assemble its iPhones, and China is also the only country aside from the United States that accounts for more than 10% of its sales.
ENERGY: Benchmark U.S. crude rose 38 cents to $55.08 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 97 cents on Monday to close at $54.69. Brent crude, used to price international oils, gained 28 cents to $60.10 per barrel in London. It dropped $1.92 the previous session to $59.81.
CURRENCY: The dollar rose to 106.40 yen from Monday’s 105.94 yen. The euro declined to $1.1199 from $1.1204.