😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

GLOBAL MARKETS-Stocks, commodities tumble after Trump vows China tariff hike

Published 2019-05-05, 10:20 p/m
© Reuters.  GLOBAL MARKETS-Stocks, commodities tumble after Trump vows China tariff hike
EUR/USD
-
USD/JPY
-
XAU/USD
-
US500
-
AXJO
-
USD/CNY
-
DX
-
GC
-
LCO
-
ESU24
-
CL
-
JP225
-
TYU24
-
CME
-
MIAPJ0000PUS
-
CSI300
-
DXY
-

* MSCI Asia ex-Japan sinks 1.6 pct

* China blue-chips down more than 4 pct; PBOC cuts some reserve requirements

* Safe-haven yen jumps, China's offshore yuan plummets

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Andrew Galbraith

SHANGHAI, May 6 (Reuters) - Global financial markets tumbled on Monday after U.S. President Donald Trump unexpectedly jacked up pressure on China to reach a trade deal, saying he would hike U.S. tariffs on Chinese goods this week.

Equity markets, which had been largely expecting a trade accord, fell sharply across export-reliant Asia as further talks were thrown into doubt.

Chinese shares plunged more than 4 percent at one point, while U.S. stock market futures ESc1 fell close to 2 percent. .N Oil prices plunged and the Chinese yuan tumbled.

Trump sharply escalated tensions between the world's two largest economies with tweeted comments on Sunday that trade talks with China were proceeding "too slowly", and that he would raise tariffs on $200 billion of Chinese goods to 25 percent on Friday from 10 percent.

He also said he would target a further $325 billion of Chinese goods with 25 percent tariffs "shortly". tweets upended the previously calm market mood that had benefited from signs of improving growth in China and the United States, and from comments from Trump and other senior U.S. officials that trade talks were going well. Wall Street Journal reported on Monday that China was considering cancelling trade talks scheduled for this week following Trump's threats. think this has got the potential to be a real game-changer," said Nick Twidale, Sydney-based analyst at Rakuten Securities Australia.

"There is still a question of whether this is one of the famous Trump negotiation tactic, or are we really going to see some drastic increase in tariffs. If it's the latter we'll see massive downside pressure across all markets," he said.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 1.6 percent shortly after China's markets reopened from a three-day national holiday.

Chinese blue-chips .CSI300 shed 4.2 percent in early trade, having closed higher before the holiday amid expectations that pressures on China's economy were easing.

The drop in Chinese shares came despite a move on Monday by China's central bank to cut reserve requirements for smaller banks to help boost lending to small and private firms. shares .AXJO were off 1.2 percent.

Japanese financial markets remain closed until Tuesday for a national holiday, but Nikkei 225 futures NKc1 dropped 2.4 percent to 21,955.

E-Mini futures for the S&P 500 ESc1 slid 1.9 percent, erasing memories of gains on Friday after the U.S. payroll data had helped to lift Wall Street.

Treasury futures TYc1 jumped 21 ticks. Data from CME Group (NASDAQ:CME) showed the market sees a nearly 58 percent chance of a Federal Reserve rate cut by the end of the year.

Chinese 10-year treasury futures also jumped, with the most-traded contract, for June delivery CFTM9 rising 0.5 percent to 97.010.

"The intensified trade and geopolitical risks are likely to prompt the regional central banks for more stimulatory policies," analysts at ING said in a note. "We expect the majority of Asian central banks meeting this week to cut their policy rates."

As investors flocked to the safe-haven yen, the dollar dropped 0.6 percent against the Japanese currency to 110.43 JPY= .

But China's yuan plunged, with the offshore unit CNH=D3 weakening to 6.8215 per dollar, its weakest level since January 10, before paring some of its losses. CNY/

The onshore yuan CNY=CFXS weakened to 6.7980 per dollar before bouncing back to 6.7923.

The single currency EUR= was down 0.1 percent on the day at $1.1189. The dollar index .DXY , which tracks the greenback against a basket of six major rivals, was flat at 97.523.

In commodity markets, U.S. crude CLc1 plunged 2.9 percent at $60.17 a barrel and Brent crude LCOc1 fell 2.6 percent to $69.01 per barrel.

Spot gold XAU= jumped 0.3 percent to trade at $1,282.91 per ounce. GOL/

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.