Monday 22 October 2018

Weakness in China leads stocks lower

In Dublin, Ryanair shares gave up early gains after Irish pilots voted to take strike action next week, but shares finished unchanged at €15.50 each. Stock image
In Dublin, Ryanair shares gave up early gains after Irish pilots voted to take strike action next week, but shares finished unchanged at €15.50 each. Stock image

Reuters

World stocks edged lower yesterday despite broad gains in Europe and rising oil prices as markets remained in the grip of trade turbulence.

A July 6 deadline is looming for Washington to impose tariffs on $34bn (€29bn) of Chinese goods that Beijing has vowed to match with tariffs on US products. President Donald Trump also threatened on Monday to "do something" if the US was not better treated by the WTO.

Prospects of a full-blown trade war and relentless yuan weakening - it has fallen 5pc in the past two weeks and is near 11-month lows - reportedly forced China into intervention via state-run banks.

"It is by far the biggest (yuan loss) I can remember. Prudence suggests it has to be matched across Southeast Asia because of the competitive implications," said Bank of New York Mellon strategist Neil Mellor.

The mood was more cheerful in Europe.

A pan-European equity index rose 1pc, the euro firmed and bond yields climbed after German Chancellor Angela Merkel struck a migration deal with her Bavarian coalition partners. MSCI's gauge of stocks across the globe shed 0.01pc.

In Dublin, Ryanair shares gave up early gains after Irish pilots voted to take strike action next week, but shares finished unchanged at €15.50 each.

Shares of Facebook fell 2.3pc after the 'Washington Post' reported a federal probe on a data breach linked to Cambridge Analytica had been broadened and would include more government agencies. That hit other technology shares as well.

"The big driver behind US resilience is that tech has been strong," said Rory McPherson, head of investment strategy at asset manager Psigma. "Expectations are pretty high for the earnings season, with talk of 20pc earnings growth year-on-year."

Irish Independent

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