LONDON: European stock markets dropped today on intensifying concerns about the impact of an all-out global trade war between China and the United States.
US President Donald Trump’s trade policy also faced market scrutiny Thursday after Washington slapped Russia with new sanctions over Moscow’s alleged involvement in a nerve agent attack in Britain.
On currency markets, the ruble extended Wednesday’s losses and is now down more than four percent against the dollar after news of fresh US sanctions on Moscow.
And the pound also remains rooted near one-year lows on fears Britain will leave the European Union next year with no deal to trade with the bloc, with the country’s trade secretary and central bank boss recently warning that the chances of such a scenario are increasing.
“The market is clearly getting more nervous over the possibility of a no-deal Brexit, which would be a messy outcome for the UK economy,” said Rodrigo Catril, senior foreign-exchange strategist at National Australia Bank.
Investors remain anxious about the global impact of a burgeoning US-China trade war between the world’s two largest economic superpowers, and with the US midterm election looming in November.
Beijing said Wednesday it would impose 25 percent tariffs on $16 billion of US goods from August 23, retaliating in kind to a warning from US officials the day before and escalating a crisis that pits the world’s top two economies against each other.
While the row has sent global markets into convulsions this year, the latest development had been widely expected, with Wall Street ending mixed.
“Investors are still wondering how quickly if at all, the tariffs so far will start to affect companies and then economies,” IG analyst Chris Beauchamp told the Media.
“We know the theory, but the actual developments will take time to become clear.”
“It is also not yet clear how far it (the trade war) will all run – until the mid-terms? Or further, until he can really get some key concessions from China,” pondered Beauchamp.
“Market resilience over the past few weeks suggests investors have calmed down for the time being, at least where US equities are concerned.”
Asian stocks however largely brushed off China’s tit-for-tat response, with most markets rising on Thursday.
But in Europe, the mood turned gloomy, as Frankfurt stocks fell 0.2 percent and Paris dropped 0.5 percent in early afternoon deals.
London shed 0.7 percent around midday as the British market was hit also by a number of companies going ex-dividend – meaning the stock’s owners are no longer entitled to the most recently declared dividend.
Added to the picture, the Kremlin on Thursday slammed as “unacceptable” the fresh US sanctions — but said Russia still hopes for constructive relations with Washington.
“I don’t think the Russia move is another front in the (trade) war, however, since Russia is the United States’ 23rd largest partner, and thus not very high on the list,” noted Beauchamp, adding that Trump was likely influenced by fears he was “being too soft on Moscow”.
London – FTSE 100: DOWN 0.7 percent at 7,719.41 points
Frankfurt – DAX 30: DOWN 0.2 percent at 12,610.88
Paris – CAC 40: DOWN 0.5 percent at 5,476.54
EURO STOXX 50: DOWN 0.4 percent at 3,480.90
Tokyo – Nikkei 225: DOWN 0.2 percent at 22,598.39 (close)
Hong Kong – Hang Seng: UP 0.9 percent at 28,607.30 (close)
Shanghai – Composite: UP 1.8 percent at 2,794.38 (close)
New York – Dow Jones: DOWN 0.2 percent at 25,583.75 (close)
Euro/dollar: DOWN at $1.1592 from $1.1610 at 2100 GMT
Pound/dollar: DOWN at $1.2876 from $1.2882
Dollar/yen: UP at 111.12 yen from 110.98 yen
Oil – Brent Crude: UP four cents at $72.32 per barrel
Oil – West Texas Intermediate: DOWN three cents at $66.91
Meanwhile, the world’s biggest temporary staffing agency said today it saw revenue growth last quarter as uncertainty in key European markets helped drive demand for short-term workers.
Economic growth slowed in Europe in the second quarter, but a range of other issues also discouraged firms from hiring permanent staff, said Adecco.
“Between the elections in Italy, Brexit, uncertainty in Catalonia, the strikes in France, there are lots of elements that weren’t favorable to growth,” said firm’s chief executive Alain Dehaze.
“Even if just barely, this lack of clarity had a tendency to push companies to prefer flexible hiring,” he said after the company announced its second-quarter results.
Overall, Adecco’s revenue edged 1 percent higher to 6.1 billion euros ($7.0 billion) in April through June. Net profits fell by 11 percent to 170 million euros as the company stepped up investments to modernize and restructure its operations.
Revenue growth was fastest in Italy, at 11 percent when adjusted for factors like changes in the value of the currencies and the number of working days.
Italy has been gripped by the uncertainty that was aggravated by an election that finally led to a populist government that has already moved to tighten restrictions on firing staff.
In France, Adecco’s largest market, revenues rose by 8 percent for placement of temporary workers, with increases driven by the manufacturing, logistics, and automotive sectors.
France also has labor market rules that make it more difficult to reduce staff numbers when business slows, which employers say to discourage them from taking on permanent employees.
“The impact of the strikes was clearly marked, but it is difficult to quantify in terms of hiring,” said Dehaze.
Meanwhile, in Britain and Ireland, Adecco also saw strong revenue growth of 6 percent thanks in part to winning new contracts. Ireland will feel the largest impact from Britain leaving the EU if London is not able to work out easy access to the single market.
In Spain and Portugal, revenues rose by 5 percent, after having grown strongly in previous quarters due to the recovery of the Spanish economy and uncertainty triggered by Catalonia’s independence drive.
In the United States, where employers are having increased difficulty in finding workers, revenues rose 3 percent, although this represented the best result in three years.
Adecco’s shares fell by 2.6 percent in midday trading while the Swiss SMI index was 0.3 percent lower.
Canada imports of cheap steel diverted from US by tariffs surges
OTTAWA: Canada’s finance minister warned Tuesday that US tariffs on steel have led to a spike in imports of cheap foreign steel that threaten the local industry.
“We’ve seen increases in imports,” Minister Bill Morneau told reporters.
“We’re concerned with, as a matter of fact of tariffs that have been imposed in the United States, that there will be producers in other parts of the world that will divert their steel to Canada, causing harm to Canadian producers,” he said.
Morneau said he would consult with industry executives over the coming weeks before deciding on measures to block the surge in cheap steel imports.
He noted that any action would target specific products, and not countries, listing a few of them: steel plates, concrete reinforcing bars, steel tubular products, hot rolled sheets, pre-painted steel, stainless steel wires, and wire rods.
“We want to make sure that we keep the market stable, that we deal with import surges in a way that doesn’t harm Canadian producers and workers,” Morneau said.
The United States in June unveiled 25 percent tariffs on steel products and 10 percent on aluminum. Ottawa hit back with retaliatory tariffs on 1st July.
Tokyo’s Nikkei index jumps more than 2.2%
TOKYO: Tokyo’s benchmark Nikkei index surged more than 2.2 percent Tuesday, swiftly recovering from the previous day’s losses, with investors encouraged by an apparent hiatus in the Turkey lira crisis.
The benchmark Nikkei 225 index, which lost more than two percent on Monday, rose 2.28 percent or 498.65 points to close at 22,356.08, snapping a four-day losing streak. The broader Topix index was up 1.63 percent or 27.45 points at 1,710.95.
Trump endorses call for Harley-Davidson boycott
WASHINGTON: US President Donald Trump endorsed calls today for a boycott of tariff-hit Harley-Davidson over its plans to move production of its iconic American motorcycles out of the country.
“Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great!” Trump tweeted.
“Most other companies are coming in our direction, including Harley competitors. A really bad move!”
Trump has taken it personally since Wisconsin-based manufacturer — once a presidential favorite — announced on Monday it is moving some production out of the US.
Harley-Davidson was targeted with EU tariffs after Trump imposed stiff duties on European steel and aluminum.
An array of US companies have complained they are being hurt by the administration’s tariff policies.
But Trump has treated the issue as a loyalty test.
“I’ve done so much for you, and then this,” Trump tweeted earlier this week. “Other companies are coming back where they belong! We won’t forget, and neither will your customers or your now very HAPPY competitors!”
Last year, Harley-Davidson announced it would build a plant in Thailand after Trump pulled out of the Trans-Pacific Partnership (TPP) trade deal, which would have abolished tariffs on their motorcycles across 40 percent of the world’s economy.
The company has repeatedly described the Thailand factory, along with other overseas production, as vital to its long-term need to boost foreign markets to make up for sluggish sales in the US.
In January, Harley-Davidson announced it would close its Kansas City, Missouri assembly plant and consolidate jobs in York, Pennsylvania.
“A Harley-Davidson should never be built in another country-never!” Trump said earlier on Twitter.