Losses on global stocks snowballed on Monday, with European markets following Asian peers lower as fresh signs emerged of slowing growth worldwide and fears grew that simmering U.S.-China tensions would torpedo chances of a trade deal.
Wall Street was set to open lower, futures indicated, after New York-listed shares posted their biggest weekly decline since March.
“Another day, another reason to sell risk. Equity markets remain in a world of pain with everyone in search of a very elusive silver lining,” said Stephen Innes at brokerage OANDA
MSCI’s all-country index .MIWD00000PUS has spent four weeks in the red, despite intermittent rallies fueled by hopes of trade war detente. The pessimism has been exacerbated by data showing the world’s largest economies — the United States, China, Japan and Germany — are all headed for slower growth.
That pushed the index 0.5 percent lower, while a pan-European index fell almost one percent by 0930 GMT and U.S. equity futures ESc1 YMc1 were down 0.5 percent, suggesting more pressure on Wall Street later in the session.
Last week’s arrest of the chief financial officer of Chinese smartphone maker Huawei for extradition to the United States was seen putting up another hurdle to the resolution of a trade war between the world’s two biggest economies.
U.S. trade representative Robert Lighthizer said Sunday there was a “hard deadline” to the 90-day trade ceasefire and without a successful end to talks by March 1, Washington would impose new tariffs on Chinese goods.
“The trade theme will preoccupy the markets through the 90-day truce period between the United States and China, waiting for any signs of concession between the parties,” said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.
Economic data has disappointed, too, underscoring the impact of the trade wars on the world economy.
Following weak trade and inflation data on the weekend, China posted far weaker-than-expected November exports and imports, reinforcing expectations Beijing will roll out more stimulus to prevent the economy cooling too fast.
However, the yuan sagged to a one-week low after the weak data CNH=D3.
“(The data) would suggest China woes go well beyond U.S. tariffs, given that China trade surplus to the U.S. was at a record level. One can only imagine the impact on China terms of trade if the U.S. follows through with a 25 percent tariff,” Innes of OANDA said.
Japan posted the worst contraction in over four years in the third quarter as uncertainty over global demand and trade saw companies slashing capital spending.
MSCI’s index of Asian equities outside Japan .MIAPJ0000PUS slid 1.5 percent to a near three-week low, Shanghai shares .SSEC retreated 0.6 percent and Japan’s Nikkei .N225shed 2.1 percent. Emerging-market stocks lost 1.3 percent .MSCIEF.
Asia’s data came after investors were spooked last week by below-forecast industrial output numbers in Germany and U.S. jobs data showing employers hired fewer workers than expected in November.
The slowdown signs also have pummelled oil prices, which have slumped around 30 percent since early October. Brent futures rose 0.2 percent to $61.90 a barrel after producer club OPEC and some non-affiliated producers announced a supply cut.
reuters
