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EUROPE-MARKETS
Europe stocks fall as US announces steep tariffs
LONDON, June 1, 2018 (BSS/AFP) – World stocks fell Thursday as harsh US
steel and aluminium tariffs sparked renewed fears of a global trade war.
Washington said it will impose the tariffs on steel and aluminium imports
from the European Union, Canada, Mexico at midnight.
The announcement prompted an immediate European threat of retaliation,
with EU chief Jean-Claude Juncker saying “counter-balancing measures” would
be announced within hours.
New York stocks extended opening losses after Commerce Secretary Wilbur
Ross announced the tariffs.
European key markets also fell, having earlier been on the path to
recovery as investors took a more sanguine view of an ongoing political
crisis in Italy.
The euro reversed earlier gains as inflation in the eurozone rose to the
ECB’s target in May, fuelled by a huge increase in oil prices as the US
decided to pull out of a nuclear deal with Iran.
Asian equities bounced back from Wednesday’s mauling as fears of turmoil
in Italy were soothed by conciliatory noises from the country’s two biggest
populist parties.
“Fears over an Italian snap election have receded,” noted Joshua Mahony,
market analyst at IG traders.
The news had provided relief to global markets beginning Wednesday after
they were sent spinning by the crisis in Italy — the eurozone’s third
biggest economy — which many feared could lead to fresh elections that could
essentially become a referendum on euro membership.
– Deutsche tumbles –
In Frankfurt, shares in Deutsche Bank fell sharply, losing seven percent
at the close, after the US Federal Deposit Insurance Commission classified
the German lender among its “problem banks” according to a person familiar
with the matter.
The designation adds to the woes facing the big German bank, which also
was downgraded to “troubled condition” by the Federal Reserve, the Wall
Street Journal reported.
Oil prices, meanwhile, diverged, with WTI futures, the US benchmark, down
as American production has surged.
Brent, the reference for much of the rest of the world, rose amid fears of
curbs on Iranian and Venezuelan production.
Crude markets have been hammered since OPEC kingpin Saudi Arabia and
Russia last week indicated they could lift a cap on production, which has
supported prices for two years, as an oversupply crisis eases.
Investors are looking forward to the release Friday of key US jobs
figures, which could provide some idea about the Federal Reserve’s plans for
raising interest rates.
Payrolls firm ADP estimated US private sector job growth at 178,000 in
May, down from 204,000 in April and slightly below analysts’ expectations.
BSS/AFP/HR/0945