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06 September 2018
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| financial markets (The Total Investment & Insurance Solutions) |
Global markets were mixed Thursday on worries that the U.S. is on the
verge of imposing tariffs on another $200 billion of Chinese goods in a
mounting trade dispute. Many developing countries are in financial turmoil as
rising interest rates and trade disputes rattled investors.
KEEPING SCORE: In Europe, France's CAC 40 added 0.3 percent to 5,278 and
Germany's DAX rose 0.2 percent to 12,063. The FTSE 100 index of leading British
shares shed 0.2 percent to 7,369. Wall Street was set for small gains, with Dow
futures up 0.2 percent and the S&P 500 futures 0.1 percent higher.
ASIA'S DAY: Japan's benchmark Nikkei 225 lost 0.4 percent to 22,487.94,
and the Kospi in South Korea dropped 0.2 percent to 2,287.61. Hong Kong's Hang
Seng tumbled 1.0 percent to 26,974.82. The Shanghai Composite index was 0.5
percent lower at 2,691.59. Australia's S&P/ASX 200 shed 1.1 percent to
6,160.40. Shares were lower in Taiwan and most of Southeast Asia.
US-CHINA TRADE: Traders fear that the Trump administration is on the
cusp of imposing tariffs of up to 25 percent on an additional $200 billion in
Chinese imports, once a public comment period ends Thursday. These tariffs are
the administration's response to its charges that Beijing uses predatory
tactics to try to supplant U.S. technological supremacy.
Since March, the U.S.
has applied nw tariffs of up to 25 percent on nearly $85 billion worth of steel
and aluminum and various Chinese products, mostly goods used in manufacturing.
Separately, the U.S. and Canada have resumed negotiations to try to keep Canada
in an updated North American trade pact that also includes Mexico. Canada's
trade envoy sounded positive after three hours of talks, and investors are
confident Canada will be included in the final deal.
CRISIS IN EMERGING MARKETS: Investors are worried about the impact of
rising interest rates and trade disputes on fast-growing — but often fragile —
emerging economies. Argentina has seen its currency slide by more than half
this year, as families try to cope with 30 percent inflation. Turkey's lira has
fallen almost as much. Iran's rial hit a new record low this week and
Venezuela's currency has lost almost all its value. The worry is that big
losses in some developing markets could ripple out into the global financial
system, as they have in the past, notably in the late 1990s, when several Asian
countries eventually required financial rescue.
ANALYST'S TAKE: "An adverse announcement by the U.S. will invoke
retaliatory tariffs from China, and this could rattle already nervy markets
amid escalating trade tensions," said Vishnu Varathan, head of economics
and strategy at Mizuho Bank.
ENERGY: Benchmark U.S. crude rose 6 cents to $68.78 a barrel. Brent
crude, used to price international oils, added 18 cents to $77.45 a barrel.
CURRENCIES: The dollar fell to 111.23 yen from 111.51 yen. The euro
strengthened to $1.1646 from $1.1623.The
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