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20 July 2018
 |
financial markets (The Total Investment & Insurance Solutions)
World stock markets fell sharply Friday after U.S. President Donald
Trump said he was prepared to put new tariffs on all Chinese imports,
escalating the rhetoric in a trade war that could hit global economic growth.
KEEPING SCORE: From being up slightly earlier
in the day, European indexes were trading lower. Germany's DAX fell 0.5 percent
to 12,622 while France's CAC 40 dropped 0.7 percent at 5,377. Britain's FTSE
100 fell 0.3 percent to 7,661. U.S. indexes were poised to open lower, with
S&P 500 futures down 0.2 percent and Dow futures 0.4 percent lower.
TRUMP TALK: Trump told the TV channel CNBC he
was ready to exchange tariffs with China until all of China's exports to the
U.S. — worth over $500 billion a year — are hit. "I'm ready to go to
500," he said. Asked if he would do it even at a cost of a stock market
drop, he said: "If it does it does."
The comments come as the U.S. government is
also considering taxing auto imports. Critics lined up this week to urge the
administration to reject the tariffs, arguing they would raise car prices,
squeeze automakers by increasing the cost of imported components and invite
retaliation from trading partners — and allies — like the European Union and
Canada.
ASIA'S DAY: Earlier, before Trump's comments
were aired, most Asian markets finished higher. Japan's Nikkei 225 bucked the
regional trend, losing 0.3 percent to 22,697.88. South Korea's Kospi added 0.3
percent to 2,289.19. Hong Kong's Hang Seng gained 0.8 percent to 28,224.48. The
Shanghai Composite Index rebounded 2.1 percent to 2,829.27. Australia's
S&P-ASX 200 increased 0.4 percent to 6,285.90.
YUAN DECLINES: The People's Bank of China set
the Chinese currency's central parity rate to 0.9 percent weaker against the
dollar on Friday. If the yuan continues to depreciate, goods exported to China
will become more expensive to consumers there. Chinese exports would also be
relatively cheaper, possibly balancing out suggested increases in tariffs by
the Trump Administration.
ANALYST'S TAKE: "One theory is that the
PBOC is depreciating the yuan because it has not enough ammunition to fight a
dollar-for-dollar increase in tariffs. The markets are very risk-off. There is
a loss in confidence right now," said Francis Tan, an economist at UOB
Bank.
CURRENCIES: The U.S. dollar was trading at
112.45 yen, roughly unchanged from Thursday. The euro rose to $1.1651 from
$1.1644.
OIL: Benchmark U.S. crude added 8 cents to
$69.54 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, used to price international oils, gained 6 cents to at $72.64.The Total Investment & Insurance
Solutions
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