Global Stocks Slip as Trade Skirmish Drags On
May 20 2019 - 8:44AM
Dow Jones News
By Avantika Chilkoti
U.S. stocks were set to open lower on Monday, as investors
continued to weigh the impact of souring U.S.-China trade
negotiations.
Futures pointed to opening losses of 0.5% for the S&P 500
and 0.4% for the Dow Jones Industrial Average.
In Europe, the Stoxx Europe 600 was down 1.1% in midmorning
trading. In Asia, the Shanghai Stock Exchange dropped 0.4% and Hong
Kong's Hang Seng Index dropped 0.6%. Japan's Nikkei gained
0.2%.
Shares in Germany's largest lender Deutsche Bank briefly dipped
below an all time low and were down 3% after analysts at UBS
recommended investors sell the stock, setting a price target of
EUR5.70 ($6.36), compared with a price of EUR6.73 ($7.51) on
Monday.
The transportation and technology services sectors also dragged
European markets lower on Monday. Ryanair dropped 3.7% after the
Dublin-based carrier posted disappointing earnings.
Microchip producers also fell, with Infineon Technologies down
4.4% following reports that San Diego-based Qualcomm has cut off
shipments to Huawei, the world's biggest maker of
telecommunications gear. Telecom-equipment maker Nokia was one of
the best performers in Europe, its shares up nearly 2% following
news that Alphabet would stop supporting products made by Huawei,
its Chinese rival.
Tensions between the U.S. and China have heated up over the past
week amid tit-for-tat tariff increases from both sides, even as
negotiators continued to try to thrash out a deal.
Trevor Gurwich, a senior portfolio manager at American Century
Investments, said many investors have been surprised by the
reemergence of tensions between the world's two largest
economies.
"The market is too sanguine about expecting a quick, easy trade
deal," he added, pointing to the complexity of the negotiations,
which could cover issues like intellectual property law.
At this stage, the main issue is gauging the impact of fresh
uncertainty on the global economy through weakened sentiment and
via financial markets, according to Marco Valli, head of macro
research at UniCredit, rather than the direct impact of lower
global trade.
The 10-year U.S. Treasury yield on Monday ticked down to 2.93%,
from 2.396% on Friday. Yields move inversely to prices. German
10-year government bonds were in negative territory at -0.098%.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was down 0.2%.
Meanwhile, India's benchmark Sensex equities index was up 3.8%
and the rupee gained 0.8% on the dollar after exit polls released
Sunday showed Prime Minister Narendra Modi is likely to return for
another five years at the helm of the world's second most populous
nation.
In Australia, the benchmark ASX 200 index gained 1.7% after a
surprise win for the conservative government. The Australian dollar
was up 0.8% on the U.S. dollar.
This week, investors will be watching for data on U.S. home
sales and eurozone purchasing managers surveys on Thursday.
In commodities, global benchmark Brent crude oil was up 0.4% at
$72.51 a barrel.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com
(END) Dow Jones Newswires
May 20, 2019 08:29 ET (12:29 GMT)
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