LONDON: Globalstock markets nervously traded sideways yesterday as investors all but gave uphope that a trade war could be nearing its end. Fears over the stand-offbetween the world's two biggest economies added to jitters over the state ofthe world economy which had inflicted heavy losses on equities Wednesday,including the worst one-day fall this year on Wall Street's Dow.
"Every timeinvestors find the strength to pick themselves up off the floor, the trade wardelivers another blow and knocks them down again," said Craig Erlam atOanda. "This morning that came in the form of reports that China isthreatening retaliation against Trump's tariffs that are due to come into forceon 1 September."
Wall Streetstocks clung to narrow gains early yesterday following mixed US economic datain a choppy follow-up to the Dow's worst session of the year. US indicesbriefly veered into negative territory shortly after the opening bell, but wereall positive after 20 minutes.
The Dow JonesIndustrial Average stood at 25,529.18, up 0.2 percent. The blue-chip index lost800 points, or more than three percent, on Wednesday. The broad-based S&P500 added 0.3 percent at 2,847.58, while the tech-rich Nasdaq Composite Indexedged up 0.1 percent to 7,784.48.
Major US indicesplunged Wednesday after a key US bond benchmark raised recession worries amidmushrooming fears of a global slowdown. Yesterday's tentative start to tradingcame after CNBC reported that a Chinese official said it hoped to "meetthe US halfway" on trade, comments that were viewed by some investors asconciliatory, even as other observers said the statement was not new.
The yield on the10-year US Treasury bond slid on Wednesday below the yield on the two-yearnote, an "inversion" that has been a reliable harbinger of recessionfor decades. "The slew of negative news has seen a huge shake down inglobal equity markets, and money has poured into government bonds," notedDavid Madden, analyst at CMC Markets UK.
'More sinister'
The trade war hashammered global demand while investment and retail sales have also slowed inthe world's second biggest economy. "Trade tensions have metastasized intosomething more sinister by affecting global growth to such a large degree thatbond markets are pricing-in a high probability of a worldwide recession,"warned Stephen Innes, managing partner at VM Markets.
Economists havewarned for months that trade tensions threatened investment and dampened globalsentiment, which was already suffering owing to fears over Brexit's impact onBritain and Europe, where the German economy is showing signs of contraction.The pound climbed against the dollar and euro as data showed British retailsales rose unexpectedly by 0.2 percent in July.
"The UK'sretail data surprised the investors by posting an upbeat reading and traderspushed the (pound) currency higher," said Naeem Aslam, chief marketanalyst at Think Markets. He warned however that "there is no light at theend of the Brexit tunnel" so far. - AFP