Stocks fall as China trade pact questions linger


The euphoria in US and Europe stock markets certainly did not last long
Chief Investment Office15 Oct 2019
Photo credit: AFP Photo


US

Stocks declined as investors mulled the implications of the partial trade deal reached last week (ended 11 October) between the US and China. Oil retreated and the dollar strengthened.

The S&P 500 Index had fluctuated most of Monday (14 October) after China appeared to pour cold water on a pact touted by US President Donald Trump, with people familiar with the situation saying it wanted to iron out details before signing it. Trading was about 28% below the 30-day average. A tweet from the Global Times’ editor-in-chief painted a more optimistic outlook, giving equities some support.

The S&P 500 fell 0.14% to 2,966.15, the Dow Jones Industrial Average declined 0.11% to 26,787.36, and the Nasdaq Composite Index slipped 0.10% to 8,048.65.

Meanwhile, all of the eight companies that raised USD1b or more in US initial public offerings (IPO) this year have fallen from their earlier peaks.

Two of the stocks – SmileDirectClub Inc and Peloton Interactive Inc – never rose above their offer prices. Even Pinterest Inc, whose shares in August had risen 92% from its IPO, has joined the downward slide, with its shares now up by only 38%.

Overall, the 146 companies that have gone public on US exchanges this year have gained only 0.6% based on a weighted average, according to data compiled by Bloomberg. That is a sharp contrast to the 42% increase for the 773 listings on exchanges outside the US. – Bloomberg News.

 

EUROPE

The euphoria in Europe and UK stock markets certainly did not last long.

The Stoxx 600 Index closed 0.49% lower at 389.69 on Monday (14 October) as cyclical sectors such as miners and technology stocks dropped, after Bloomberg reported that China wants more talks before signing US President Donald Trump’s “phase one” deal. That is in stark contrast to Friday, when the gauge had its best day since January as Trump touted the partial deal between the two countries.

The European benchmark did manage to claw back some losses after Global Times Editor-in-Chief Hu Xijin said in a tweet that the US and China made a breakthrough in trade talks last week (ended 11 October), without saying where he got the information.

In the UK, the mood also soured after a jubilant end to the week, as the European Union (EU) warned that Brexit deal talks were still a long way from a breakthrough. The domestically-focused FTSE 250 Index, which soared 4.2% Friday amid hopes of a deal, fell 0.6%. UK banks, housebuilders, and retailers all pared the previous trading day’s gains.

Investors will now be keeping an eye on developments ahead of Thursday’s EU summit for any breakthroughs regarding Brexit. “I think we just have to wait and see still, unfortunately, which is kind of where we’ve been for the last three years,” a strategist said. – Bloomberg News.

 

JAPAN

Japan’ Nikkei 225 Index rose 1.29% to 22,080.34 at the open on Tuesday (15 October). The country’s markets were closed Monday for a public holiday.

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