World stocks sink as tariff deadline approaches
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[December 10, 2019]
By Ritvik Carvalho
LONDON (Reuters) - Global stock markets
fell for a second day on Tuesday, as caution over a Dec. 15 deadline for
the next round of U.S. tariffs on Chinese imports weakened risk appetite
and limited outsized market moves.
Following their counterparts in Asia, European shares fell for a second
day, with the pan-European STOXX 600 index down 1.09% at 1206 GMT.
Germany's DAX fell 1.44% to its lowest in a week. [.EU]
The MSCI All-Country World Index, which tracks shares across 47
countries, was down 0.2%. U.S. stocks futures were down about 0.3%. [.N]
Market uncertainty before the tariff deadline was reinforced by comments
from U.S. Agriculture Secretary Sonny Perdue on Monday, who said
President Donald Trump did not want to implement tariffs but did want to
see "movement" from China.
The deadline looms over a series of events this week, with markets also
awaiting the UK election on Thursday and U.S. and European Central Bank
Euro zone government bond yields were mostly steady, refusing to budge
from recent ranges. Germany's benchmark Bund yield inched up to -0.29%,
moving in a three-basis- point-range.
Italian 10-year bond yields, which fell on Monday, were flat on the day
at 1.39%. [GVD/EUR]
In the euro zone, Christine Lagarde holds her first meeting and news
conference as ECB chief on Thursday.
"Expectations for policy action from the ECB and Fed are subdued," said
Commerzbank rates strategist Rainer Guntermann. "Lagarde's communication
style will be watched closely, but that's unlikely to lead to any
repricing in bond markets."
Germany's ZEW research institute said its monthly index on economic
morale among investors rose to 10.7 from -2.1 a month earlier, much
higher than forecast by economists.
The reading pushed up a market gauge of euro zone inflation expectations
to its highest in a month and boosted the euro, which last traded 0.15%
higher at $1.1082.
On Tuesday, the U.S. two-year yield, a sign of market expectations of
Fed fund rates, was at 1.619%, down from its close of 1.627% on Monday.
The 10-year Treasury yield was at 1.8138% from a U.S. close of 1.8225%
With investors reluctant to make big bets, MSCI's broadest index of
Asia-Pacific shares outside Japan was 0.25% lower. China's benchmark
Shanghai Composite index was higher by 0.1%.
New data in China showed producer prices fell in November but consumer
prices spiked, complicating efforts to boost demand as economic growth
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The London Stock Exchange Group offices are seen in the City of
London, Britain, December 29, 2017. REUTERS/Toby Melville
Australian shares were down 0.34%. Japan's Nikkei fell 0.08%.
Tepid trade followed weakness on Wall Street overnight. The Dow
Jones Industrial Average fell 0.38% to 27,909.6, the S&P 500 lost
0.32% to 3,135.96 and the Nasdaq Composite dropped 0.4% to 8,621.83.
Investors were also keeping an eye on the U.S. Federal Reserve. The
Fed is expected to leave rates unchanged at its two-day policy
meeting, which ends Wednesday. Analysts say investors will be
watching policymakers' forecasts for future U.S. economic growth.
Investors have focused this year on the risks of the UK crashing out
of the European Union without a deal and a sharp escalation in trade
war tensions, said Frank Benzimra, head of equity strategy at
"What you have seen since the end of the third quarter and the
beginning of the fourth quarter was these two risks were receding
... And now this week you see those two concerns coming back on the
market," he said, adding that he expected their effect would be
Sterling, which reached its highest against the dollar since April
on Monday at $1.3180, added 0.3%, last changing hands at $1.3169. [GBP/]
Expectations of a Conservative Party victory in Thursday's UK
election have powered a rally in the pound, but options markets
indicate worries of a post-election retreat.
The dollar index, which tracks the U.S. currency against a basket of
six other major currencies, was down 0.14% at 97.506.
Worries over trade continued to push oil prices lower. Data released
on Sunday showed that Chinese exports declined for a fourth straight
month, underscoring the impact of the trade war between the U.S. and
China, which is in its 17th month.
Global benchmark Brent crude fell 0.54% to $63.90 a barrel and U.S.
West Texas Intermediate crude dipped 0.54% to $58.7 a barrel. [O/R]
Gold rose 0.4% to $1,467.31 per ounce. [GOL/]
(Reporting by Ritvik Carvalho; additional reporting by Dhara
Ranasinghe in London and Andrew Galbraith in Shanghai; editing by
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