Shares under pressure; Trade war concerns

Global Stock Markets

Shares were under pressure for a second day on Wednesday and the dollar held near one-week lows after a threat by U.S. President Donald Trump to slap $60 billion in tariffs on Chinese imports rekindled investors’ concerns about the economic growth outlook. 

Equities attempted to recover after Tuesday’s hefty losses, heartened by robust Chinese factory data, with S&P500 futures signalling a firmer opening for Wall Street ESc1.

But markets struggled to overcome fears of a trade war and U.S. political uncertainty after Trump abruptly sacked Secretary of State Rex Tillerson.

The Tillerson news, coming days after the exit of Gary Cohn, a strong free trade proponent, had sent the dollar skidding, pushed world stocks lower and bond prices higher.

The moves accelerated after news of the planned tariffs, which reportedly target Chinese tech, electronics and telecoms.

The negative momentum faded somewhat in Europe, with a pan-European equity index up 0.3 percent after it fell 1 percent on Tuesday .

The index was boosted by a 1 percent jump in resources stocks which benefited from the Chinese data .SXPP as well as a 3-billion-euro share buyback at German sportswear firm Adidas (ADSGn.DE). 

That left MSCI’s all-country equity index down only marginally .MIWD00000PUS, its second day in the red and off one-month highs hit before news broke of Tillerson’s sacking. 

His departure brings to 35 the number of senior Trump administration officials who have left, Citi estimates. 

The dollar has been another casualty, though it swung 0.15 percent higher after three days of losses. U.S. Treasury yields traded just off one-week lows touched earlier in the session .DXY US10YT=RR. 

German 10-year government bond yields DE10YT=RR approached one-month lows and stand 20 basis points below this year’s peak, at 0.60 percent. 

Central banks in Japan and the euro zone, meanwhile, also stuck with their dovish message.  

The euro slipped 0.2 percent against the dollar, inching off an overnight one-month high EUR= after European Central Bank President Mario Draghi said the ECB needed more evidence that inflation was rising towards target.