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EUROPE-MARKETS
European stocks drop on fears of new trade war escalation
LONDON, Sept 12, 2018 (BSS/AFP) – European and US stock markets came under
pressure Tuesday on fears of a new escalation in the burgeoning trade war
between China and the United States, dealers said.
China is planning to ask the World Trade Organization for permission to
impose sanctions on the US over anti-dumping practices taken against some
Chinese products.
“The strained trading relations between the US and China have taken a new
turn,” CMC analyst David Madden said of the move which he said “could trigger
a reaction from President Trump and investors are exiting equities as a
result”.
Key European markets London and Frankfurt both ended lower, while Paris
managed to edge into positive territory.
Wall Street, which had opened lower, also posted small gains approaching
midday in New York on bargain-hunting.
President Donald Trump had already ramped up the China-US tariffs row late
last week by threatening to tax all imports from the Asian giant, sending
equities further into the red on Monday.
The WTO case dates back to December 2013, when China filed a dispute
against the United States, taking issue with the way Washington assesses
whether exports have been “dumped” at unfairly low prices onto the US market.
According to WTO rules, the plaintiff in such cases can request permission
to impose sanctions if the parties have not reached agreement on satisfactory
compensation within 20 days of the WTO deadline.
Washington will nonetheless still have the right to oppose any sanction
decision, opening the way for a lengthy arbitration process that could take
months to settle.
Earlier Tuesday, Asian investors also trod uneasily as concerns over trade
and emerging markets dragged on confidence.
Hong Kong fell 0.7 percent and is now more than 20 percent from its record
touched in January, putting it in a bear market.
Shanghai hit lows not seen since January 2016.
However, Tokyo rose 1.3 percent as exporters were supported by a weaker
yen.
Dealers are also awaiting developments in Argentina, which is holding talks
with the International Monetary Fund on accessing bailout cash as it looks to
avert an all-out crisis.
The country’s troubles, along with worries in Turkey and South Africa, have
led to concerns of contagion in other emerging markets or even the global
economy.
BSS/AFP/HR/0950