London: Trade war worries permeated global stock markets on Thursday, eating into the previous day’s hard-won gains as mixed signals from the White House fuelled uncertainty.
Focus was also on Brussels, where EU leaders facing deep divisions on migration meet for a summit that the embattled German Chancellor Angela Merkel said could decide the fate of the bloc itself.
“The recovery in the stock markets could not last long,” said Fawad Razaqzada, a market analyst at Forex.com .
Trade fears were being compounded by expectations that borrowing costs will steadily rise worldwide, causing investors to feel “downbeat”, he added.
Escalated trade concerns were “continuing to hamper sentiment and drain conviction”, said Charles Schwab analysts.
Concerns about the Chinese economy are adding to a knock in confidence, with the yuan continuing to weaken and mainland stocks now in bear market territory having fallen more than 20 percent from recent highs.
– Get used to it –
“Once again European indices are trading in the red,” noted Craig Erlam, senior market analyst at Oanda trading group.
“We may have to get used to this risk averse environment in the near-term,” he added.
Dealers are struggling to get a handle on the situation owing to confusion over US President Donald Trump’s trade strategy.
Trump appears to have backed away from a plan to impose tough new restrictions on Chinese investment in the United States, soothing concerns about a conflagration between the world’s top economies.
At the same time however, the president’s economic advisor and trade hawk Larry Kudlow warned that stern measures were still being contemplated.
– Trade war hurts yuan –
The yuan is also at the weakest level against the dollar since December, having endured one of its worst runs since a mid-2015 devaluation that sparked a global market meltdown.
The dollar, in turn, was trading weaker against the euro and the yen after the Commerce Department revised down US growth figures for the first quarter.
Shares prices of energy firms meanwhile extended recent gains after crude hit a new three-and-a-half year high on data showing US stockpiles plunged by the most since 2016.
– Key figures around 1340 GMT –
London – FTSE 100: DOWN 0.3 percent at 7,595.14 points
Frankfurt – DAX 30: DOWN 1.4 percent at 12,172.94
Paris – CAC 40: DOWN 1.1 percent at 5,270.38
EURO STOXX 50: DOWN 1.0 percent at 3,364.18
New York – Dow Jones: DOWN 0.2 percent at 24,076,78
Tokyo – Nikkei 225: FLAT at 22,270.39 (close)
Hong Kong – Hang Seng: UP 0.5 percent at 28,497.32 (close)
Shanghai – Composite: DOWN 0.9 percent at 2,786.90(close)
Euro/dollar: UP at $1.1576 from $1.1559 at 2100 GMT
Pound/dollar: DOWN at $1.3068 from $1.3117
Dollar/yen: DOWN at 110.20 yen from 110.27 yen
Oil – Brent Crude: UP 4 cents at $77.50 per barrel
Oil – West Texas Intermediate: DOWN 12 cents at $72.64