LONDON: US stock markets largely shrugged off latest volley of tariffs in the escalating trade war between the United States and China, although oil prices fell sharply.
In late morning trading, Wall Street’s main indices were mixed, with the blue-chip Dow Jones Industrial Average slipped less than a tenth of a percent.
However the broader S&P 500 and tech-heavy Nasdaq Composite both climbed despite China announcing it will impose 25 percent tariffs on a further $16 billion of US goods, making good on its promise to retaliate against new American levies.
The US government announced late Tuesday that 25 percent tariffs on $16 billion in Chinese goods would go into effect on August 23.
“Markets had a muted reaction to China’s announcement that it plans to impose tariffs on $16 billion worth of US goods, starting on 23 August,” said market analyst David Madden at CMC Markets UK.
“The token retaliation from Beijing keeps the trade spat alive, and it seems like China were doing it to send a message, rather than to inflict financial pain on the US,” he added.
European markets were less sanguine, with both Frankfurt and Paris stocks moving downwards.
However London’s benchmark FTSE 100 index carved out a gain of 0.8 percent.
“It is not hard to find the cause of the FTSE 100’s outperformance today,” said Chris Beauchamp, chief market analyst at online trading firm IG.
“The pound continues its slide versus the dollar on fears of a ‘No Deal’ Brexit, providing at least a pleasing tailwind for UK stocks.”
The pound sank this week on growing concern of a chaotic no-deal exit for Britain from the European Union in March 2019. The weak currency however lifts shares in multinationals that derive the lion’s share of their earnings in dollars.
Asia equities stuttered Wednesday, with Tokyo down 0.1 percent, Shanghai shedding 1.3 percent, but Hong Kong ended up 0.4 percent in value.
Global stock prices had risen Tuesday on the back of solid second-quarter US corporate earnings which temporarily took investor attention off festering trade wars, dealers said.
Both the S&P 500 and the Nasdaq Composite are not far below records.
Oil prices, which had climbed this week on expectations that renewed US sanctions on Iran will reduce supplies to the market, fell sharply on data showing ample supplies in the United States.
“A weaker-than-expected fall in crude inventories has taken the wind out of oil’s sales, with both Brent and WTI down by more than 2 percent,” said IG’s Chris Beauchamp.
“Signs of weaker demand in the US have trumped the bullish case for oil based on Iran tensions, which have stubbornly refused to pick up in recent days,” he added.
– Key figures at 1530 GMT –
New York – Dow Jones: DOWN 0.07 percent at 25,611.58 points
London – FTSE 100: UP 0.8 percent at 7,776.65 (close)
Frankfurt – DAX 30: DOWN 0.1 percent at 12,633.54 (close)
Paris – CAC 40: DOWN 0.4 percent at 5,501.90 (close)
EURO STOXX 50: DOWN 0.4 percent at 3,492.00
Tokyo – Nikkei 225: DOWN 0.1 percent at 22,644.31 (close)
Hong Kong – Hang Seng: UP 0.4 percent at 28,359.14 (close)
Shanghai – Composite: DOWN 1.3 percent at 2,744.07 (close)
Euro/dollar: UP at $1.1603 from $1.1599 at 2100 GMT
Pound/dollar: DOWN at $1.2887 from $1.2939
Dollar/yen: DOWN at 110.94 yen from 111.38 yen
Oil – Brent Crude: DOWN $1.91 at $72.74 per barrel
Oil – West Texas Intermediate: DOWN $2.00 at $67.17
Source: Brecorder
