World stocks drift lower on trade war fears

Frankfurt posted the biggest losses among key European markets

London (AFP) – Europe’s stock markets slid Tuesday following a Wall Street slump driven by trade war fears and technology sector woes.

In late morning deals, Frankfurt tumbled more than one percent, also on a survey showing a sharp slowdown in German manufacturing activity. Paris and London also declined.

All three major European markets were shut on Friday and Monday as investors enjoyed a four-day holiday weekend.

Wall Street and most Asian indices had opened on Monday.

Asian stock markets ended mixed, as fears of a trade war between the United States and China loomed large.

“There was no real let up this Tuesday, the European indices continuing to play catch-up with Monday’s value-sapping trade war developments,” said Spreadex analyst Connor Campbell.

Wall Street had plunged on Monday, the first trading session back after a US holiday on Friday, after China slapped tariffs on 128 US exports worth $3 billion including fruit and pork.

China’s action — the latest tit-for-tat over US President Donald Trump’s duties on steel and aluminium — followed weeks of rhetoric that has raised fears of a trade war between the world’s two biggest economies.

Overall, Asian stock market losses were not as bad as first feared at the open, with stocks across the region clawing back ground later in the session.

“The impact from the US market turned out not to be so bad as to incite terror here” thanks to lingering hopes that tensions may ease in the weeks to come, noted Makoto Sengoku, market analyst at Tokai Tokyo Research Institute.

In New York on Monday, the Dow Jones Industrial Average tumbled 1.9 percent and the broad-based S&P 500 slumped 2.2 percent.

But it was tech stocks that led the declines, with the Nasdaq diving 2.7 percent.

 – ‘Throw baby out with bathwater’ – 

Giants Amazon, Facebook and Tesla Motors suffered the largest drops but the negative feeling infected the broader market.

Amazon sank 5.2 percent after a series of attacks by Trump in recent days in which he accused the retailer of profiteering at the expense of the US Postal Service.

“It started with the tech stocks and it’s become ‘throw the baby out with the bathwater,’” said J.J. Kinahan, chief market strategist at TD Ameritrade.

“They’re reassessing the valuation on the entire market,” said Kinahan. “A while ago all news was good news. Now (the) news is all things to be afraid of.”

 – Key figures around 1040 GMT – 

London – FTSE 100: DOWN 0.4 percent at 7,030.88 points 

Frankfurt – DAX 30: DOWN 1.1 percent at 11,964.70

Paris – CAC 40: DOWN 0.6 percent at 5,136.86 

EURO STOXX 50: DOWN 0.9 percent at 3,330.89

Tokyo – Nikkei 225: DOWN 0.5 percent at 21,292.29 (close)

Hong Kong – Hang Seng: UP 0.3 percent at 30,180.10 (close)

Shanghai – Composite: DOWN 0.8  percent at 3,136.63 (close) 

New York – Dow: DOWN 1.9 percent at 23,644.19 (close)

Dollar/yen: UP at 106.07 yen from 105.89 yen at 2100 GMT 

Euro/dollar: UP at $1.2319 from $1.2302 

Pound/dollar: UP at $1.4084 from $1.4044

Oil – Brent North Sea: UP 31 cents at $67.95 per barrel

Oil – West Texas Intermediate: UP 26 cents at $63.27