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GLOBAL MARKETS-Stocks slip as new U.S.-China tariffs add to growth risks

Published 2019-09-02, 01:49 a/m
GLOBAL MARKETS-Stocks slip as new U.S.-China tariffs add to growth risks
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* U.S. stock futures down 0.4%, Asian shares down

* U.S. tariffs seen hitting U.S. consumers

* Hong Kong protests escalate, hit Hong Kong shares

* Mainland Chinese shares rise

* European shares seen flat

By Hideyuki Sano

TOKYO, Sept 2 (Reuters) - Global stock prices fell on Monday after the United States and China imposed new tariffs on each other's goods, reinforcing investors' worries over slowing global growth, with no clear end in sight for the trade war.

The E-mini futures for U.S. S&P500 ESc1 fell as much as 1.06% in early trade and last stood down 0.39% while U.S. Treasuries futures prices TYv1 rose a tad.

Volumes remained thin in Asia ahead of a U.S. public holiday and European shares are expected to open little changed, with pan-European Euro Stoxx 50 futures STXEc1 almost flat in early Monday trade.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.24%, led by 0.5% drop in Hong Kong's Hang Seng .HSI after another weekend of violent anti-government protests.

Chinese shares, however, bucked the bearish trend, with the CSI300 index .CSI300 rising 1.1% despite the trade row escalation. Providing some tailwind to mainland markets was a pledge by China's State Council to boost support for the economy. Manufacturing Purchasing Managers' Index (PMI), a private sector survey, on Monday showed factory activity unexpectedly expanded in August, though gains were modest and contrasted with official data that pointed to further contraction. clear that Beijing is willing to support the economy through fiscal stimulus," said Kenji Hashizume, senior fund manager at Mitsui Sumitomo DS Asset Management in Hong Kong.

"While I do not expect the Sino-U.S. relations to keep deteriorating, it won't be solved easily either," he said.

Washington slapped 15% tariffs on a variety of Chinese goods on Sunday - including footwear, smart watches and flat-panel televisions - while Beijing imposed new duties on U.S. crude, the latest escalation in a bruising trade war. studies suggest the tariffs will cost U.S. households up to $1,000 a year, with the latest round hitting a significant number of U.S. consumer goods.

In retaliation, China started to impose additional tariffs on some of the U.S. goods on a $75 billion target list. Beijing did not specify the value of the goods that face higher tariffs from Sunday.

Although U.S. President Donald Trump has said the two countries will hold talks in September, there are doubts any such talks would lead to a breakthrough. far Trump appears defiant though on the tariff hikes, blaming the Fed and American companies for their difficulties in dealing with the tariffs," said Shane Oliver, chief economist at AMP in Sydney.

"There is a long way to go though and re-establishing trust will be difficult after the experience since mid-last year. Share markets may still have to fall further to pressure Trump to resolve the issue."

Many market players say the market's reaction was likely exaggerated by algorithm-driven players' flows in thin trading conditions at start of Asian trade on Monday.

Liquidity could be even more limited than usual because of a U.S. market holiday on Monday.

"(The market move) goes to show you how many data mining algos are involved with equity linked compared to forex-linked. Was anyone surprised by these tariffs that took effect yesterday?" said Takeo Kamai, head of execution at CLSA in Tokyo.

Tension is also running high in Hong Kong, with police and protesters clashing in some of the most intense violence since unrest erupted more than three months ago over concerns Beijing is undermining democratic freedoms in the territory. of protesters blocked roads and public transport links to Hong Kong airport and police made several arrests after demonstrators smashed CCTV cameras and lamps with metal poles and dismantled station turnstiles.

China, eager to quell the unrest before the 70th anniversary of the founding of the People's Republic of China on Oct. 1, has accused foreign powers, particularly the United States and Britain, of fomenting the unrest.

Oil prices also fell on Monday.

Brent crude LCOc1 futures fell 0.37% to $59.03 a barrel while U.S. West Texas Intermediate (WTI) crude futures CLc1 were almost flat at $55.15.

In currency markets, the dollar dipped slightly against the yen to 106.12 yen JPY= .

The euro stood almost flat at $1.09905 EUR= , not far from two-year low of $1.0963 hit in U.S. trade on Friday.

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