AFP, New York :
Global stocks tumbled Friday, with investors fleeing equities for safe-haven assets following the latest salvos on international trade.
With US President Donald Trump announcing new tariffs on all Mexican imports and China warning it would create a list of “unreliable” foreign companies, investors piled into low-risk assets, sending the yield on 10-year German government bonds to a record low.
German Bunds hit minus 0.213 percent in the secondary market, breaking the previous record of minus 0.205 percent set in July 2016, while the 10-year US
Treasury note fell further, stoking additional investor angst. The yen, another safe-haven investment, shot higher, pressuring Tokyo’s main stocks index, which plunged 1.6 percent.
As trade tensions escalated, US indices shed more than one percent in a bitter conclusion to a bruising May, the first month of 2019 with losses.
European stocks also ended solidly lower, while oil prices fell hard. Trump’s latest tariff move amounted to “another log on the fire of global risk aversion,” analyst Joseph Manimbo of Western Union Business Solutions said in a client note.
“The news heightened fears of aggressive trade policy slowing growth in the US and globally, sending stocks and oil markets swooning, and investors ducking for cover in safer currencies like the yen, Swiss franc and greenback.”
Trump’s announcement late Thursday of a five percent tariff on all goods
from Mexico starting June 10, which will quickly ramp up to 25 percent, was
aimed at forcing the country to stem a flow of migrants from Central America
crossing the southern US border.
Trump had only recently kick-started the process of ratifying a new North
American trade pact by removing all tariffs on aluminum and steel, but he has
now put the accord at risk, according to experts and key US lawmakers.
Carmakers were among the hardest hit by Trump’s announcement, with shares
in Mazda plummeting 7.1 percent, Nissan tumbling 5.3 percent, Renault
shedding 4.3 percent and Volkswagen losing 2.8 percent.
General Motors slumped 4.3 percent and Fiat Chrysler sank 5.8 percent,
while auto suppliers such as Delphi and Lear were also battered by the
announcement.
Trump’s action comes amid a protracted trade war between the United States
and China.
The tariff hike on $200 billion in Chinese goods earlier this month “may
already be undermining foreign demand,” analyst Julian Evans-Pritchard of
consultancy Capital Economics wrote in a research note.
China is retaliating by raising tariffs on $60 billion worth of US goods
on Saturday, while official data Friday showed the Asian economic giant’s
manufacturing activity contracted more than expected in May.
Beijing also announced Friday that it would release a list of “unreliable”
foreign companies and individuals, striking back after the United States
targeted telecom giant Huawei in their escalating trade war.
Global stocks tumbled Friday, with investors fleeing equities for safe-haven assets following the latest salvos on international trade.
With US President Donald Trump announcing new tariffs on all Mexican imports and China warning it would create a list of “unreliable” foreign companies, investors piled into low-risk assets, sending the yield on 10-year German government bonds to a record low.
German Bunds hit minus 0.213 percent in the secondary market, breaking the previous record of minus 0.205 percent set in July 2016, while the 10-year US
Treasury note fell further, stoking additional investor angst. The yen, another safe-haven investment, shot higher, pressuring Tokyo’s main stocks index, which plunged 1.6 percent.
As trade tensions escalated, US indices shed more than one percent in a bitter conclusion to a bruising May, the first month of 2019 with losses.
European stocks also ended solidly lower, while oil prices fell hard. Trump’s latest tariff move amounted to “another log on the fire of global risk aversion,” analyst Joseph Manimbo of Western Union Business Solutions said in a client note.
“The news heightened fears of aggressive trade policy slowing growth in the US and globally, sending stocks and oil markets swooning, and investors ducking for cover in safer currencies like the yen, Swiss franc and greenback.”
Trump’s announcement late Thursday of a five percent tariff on all goods
from Mexico starting June 10, which will quickly ramp up to 25 percent, was
aimed at forcing the country to stem a flow of migrants from Central America
crossing the southern US border.
Trump had only recently kick-started the process of ratifying a new North
American trade pact by removing all tariffs on aluminum and steel, but he has
now put the accord at risk, according to experts and key US lawmakers.
Carmakers were among the hardest hit by Trump’s announcement, with shares
in Mazda plummeting 7.1 percent, Nissan tumbling 5.3 percent, Renault
shedding 4.3 percent and Volkswagen losing 2.8 percent.
General Motors slumped 4.3 percent and Fiat Chrysler sank 5.8 percent,
while auto suppliers such as Delphi and Lear were also battered by the
announcement.
Trump’s action comes amid a protracted trade war between the United States
and China.
The tariff hike on $200 billion in Chinese goods earlier this month “may
already be undermining foreign demand,” analyst Julian Evans-Pritchard of
consultancy Capital Economics wrote in a research note.
China is retaliating by raising tariffs on $60 billion worth of US goods
on Saturday, while official data Friday showed the Asian economic giant’s
manufacturing activity contracted more than expected in May.
Beijing also announced Friday that it would release a list of “unreliable”
foreign companies and individuals, striking back after the United States
targeted telecom giant Huawei in their escalating trade war.
