London (AFP) – Stock markets and the dollar fell Monday following reports that US President Donald Trump is planning to hit China with another round of tariffs, dealing a blow to hopes for conciliatory talks between the two economic giants.
Traders sent stock indices higher Thursday and Friday as it emerged that US Treasury Secretary Steven Mnuchin had offered to meet officials from Beijing to avert an all-out trade war.
However, The Washington Post and Wall Street Journal said the president had decided to impose 10 percent levies on $200 billion of Chinese imports and could make an announcement in the coming days.
That would come on top of the $50 billion already announced over the summer and would account for about half of China’s exports to the United States. Beijing has threatened to retaliate against any measures.
“The ongoing conflict between the US and China continues to be a primary driver of market sentiment, with investors concerned about the prospect of a full blown trade war as neither side shows a willingness to blink,” said Craig Erlam, senior market analyst at Oanda trading group.
Hong Kong’s stock market led losses Monday, dropping 1.3 percent, while Shanghai ended 1.1 percent off. Tokyo was closed for a public holiday.
In mid-session European trading, London fell 0.2 percent, Frankfurt lost 0.5 percent and Paris dropped 0.3 percent.
While investors are in a selling mood, some positives could be taken from reports that Trump was considering 10 percent tariffs instead of the feared 25 percent, said JP Morgan Asset Management global market strategist Kerry Craig.
“Timing is also important when it comes to enacting any new tariffs. A staggered implementation is being viewed as the best of a bad situation,” Craig added.
Meanwhile elsewhere on foreign exchange Monday, emerging market currencies continue to struggle as investors fret over a possible spillover from financial crises in Argentina, Turkey and South Africa.
The pound held up, with British Prime Minister Theresa May warning that her Brexit plan is the only alternative to crashing out of the European Union without agreement, in an interview broadcast Monday.
It comes as the International Monetary Fund warned that Britain’s economy would suffer “substantial costs” should it depart the EU in March with no divorce agreement,
– Key figures around 1015 GMT –
London – FTSE 100: DOWN 0.2 percent at 7,286.63 points
Frankfurt – DAX 30: DOWN 0.5 percent at 12,063.41
Paris – CAC 40: DOWN 0.3 percent at 5,336.54
EURO STOXX 50: DOWN 0.2 percent at 3,338.14
Hong Kong – Hang Seng: DOWN 1.3 percent at 26,932.85 (close)
Shanghai – Composite: DOWN 1.1 percent at 2,651.79 (close)
Tokyo – Nikkei 225: Closed for a public holiday
New York – Dow Jones: FLAT at 26,154.67 (close)
Euro/dollar: UP at $1.1661 from $1.1627 at 2030 GMT on Friday
Pound/dollar: UP at $1.3100 from $1.3069
Dollar/yen: DOWN at 111.98 yen from 112.00 yen
Oil – Brent Crude: UP 66 cents at $78.75 per barrel
Oil – West Texas Intermediate: UP 53 cents at $69.52 per barrel
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