Global Stocks Fall as Trade Talks Flounder
November 20 2019 - 9:14AM
Dow Jones News
By Caitlin Ostroff
Global stocks retreated Wednesday as trade talks between the
U.S. and China appeared to near an impasse, with President Trump
threatening to raise tariffs further.
Futures tied to the Dow Jones Industrial Average receded 0.3%,
while the Shanghai Composite Index ended the day down 0.8%.
Investors are growing concerned that relations between the world's
two biggest economies may be further strained after the U.S. Senate
passed a bill in support of Hong Kong's antigovernment
protesters.
The bill would require the U.S. Secretary of State to certify
annually that Hong Kong remained sufficiently independent from
Beijing to warrant the special status that has helped the city grow
into a global financial hub. China's Foreign Ministry said the act
was a violation of international law, while Hong Kong officials
said foreign legislatures shouldn't interfere with its internal
affairs.
"The Chinese aren't very happy about that bill progressing,"
said Paul Flood, multiasset portfolio manager at Newton Investment
Management. "It does make the tariffs discussion more
difficult."
A breakdown in the trade talks would derail the White House's
plans for a limited "phase one" agreement this year. Investors are
also growing concerned that fresh tariffs on Chinese products
including smartphones and toys may be put into effect Dec. 15,
directly hitting American consumers. Mr. Trump said in a Tuesday
cabinet meeting that China needs to make a deal he likes to avoid
levies going even higher.
Ahead of the opening bell, Urban Outfitters dropped 15% after
the retailer's third-quarter profit declined. Shares in Target
climbed about 10% in premarket trading after the retail chain
posted another quarter of rising sales. Lowe's jumped 4.6% after
the home-improvement retailer raised its profit forecast and
disclosed plans to shut some Canadian stores.
U.S.-traded securities in Pinduoduo, which competes with Alibaba
Group Holding, declined 23% after the Chinese e-commerce company
posted a third-quarter loss.
Meanwhile, the pan-continental Stoxx Europe 600 index fell 0.5%,
led by declines in almost every sector.
Investors reached for haven assets, sending the yield on 10-year
Treasurys to 1.745% Wednesday from 1.785% Tuesday. Bond yields
across Europe also fell, with the German 10-year bund yielding
minus 0.368%, from minus 0.337% Tuesday.
In the U.K., the pound fell 0.2% against the dollar after fresh
opinion polls suggested that British voters are divided over
whether Prime Minister Boris Johnson or Labour Party leader Jeremy
Corbyn won the first television debate Tuesday night in the run up
to the general election. The FTSE 250 index, which tracks companies
with significant domestic operations, slumped 0.5%.
Later today, the Federal Reserve will issue its October policy
meeting's minutes, which may offer further clues about the
direction of future policy.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
November 20, 2019 08:59 ET (13:59 GMT)
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