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Markets stumble on China tariff fears
September 08, 2018
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LONDON: World equities stumbled on Friday as investors feared that the United States will ramp up its trade war with China by imposing fresh tariffs, dealers said.

US jobs creation numbers and wage increases, reported before US markets opened, came in higher than expected, strengthening the case for an early Fed rate increase, boosting the dollar and weighing on bond prices.

Key European stock markets were lower, with London underperforming its peers thanks to a strong pound, and Wall Street also came off to a weaker start.

“US stocks are trading lower in early action, extending a sluggish start to September, amid festering global trade uneasiness, and as the August employment report, particularly the much stronger-than-expected wage component, appears to be amplifying Fed uncertainty,” analysts at Charles Schwab said.

A Fed rate hike later this month is “highly-expected”, they said, but December is in question.

Markets have suffered heady losses in the first week of September, as investors worry over contagion from the ongoing emerging markets crisis − and the US-China trade spat.

“There were no signs of an end of the week recovery, with September getting off to the worst start possible for the European indices,” said Spreadex analyst Connor Campbell.

“Alongside the general market malaise − informed by the potential escalation of the US-China trade war and the sorry state of the emerging markets − the FTSE has been hampered by the pound’s recent performance, with the currency rising following signs of a Brexit breakthrough.” The pound won a boost this week from rekindled hopes of a long-awaited trade deal between London and Brussels, ahead of Britain’s scheduled departure from the European Union next March.

The stronger pound however tends to dent London’s benchmark FTSE 100 shares index because it weighs on the profits of multinationals.

Agence France-Presse

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