Daily Times

Stock markets mostly fell Thursday, as the US Federal Reserve chief’s upbeat assessment of the economy failed to allay concerns about a global trade war, analysts said.

The dollar rose across the board, with the pound slumping under $1.30 for the first time in 10 months as weak UK retail sales data dented the chances of an interest rate hike from the Bank of England in August, experts added.

“A drop in retail sales… has sent the pound sharply lower, continuing the general trend of the week,” noted Chris Beauchamp, chief market analyst at IG trading group.

In Paris, shares in advertising group Publicis slumped 6.8 percent to 54.32 euros after the French firm said sales tumbled in the second quarter.

However Iliad, the parent company of mobile operator Free, jumped 8.5 percent to 145.85 euros after the company said it signed up one million clients since launching service in Italy at the end of May.

Across the Atlantic, Federal Reserve Chairman Jerome Powell on Wednesday expressed optimism over the US economy.

But during a second day of congressional testimony, he warned that the spiralling global trade row was having a negative impact on companies in the US.

“We hear from our extensive network of business contacts a rising chorus of concerns,” he said.

Threat of more tariffs

President Donald Trump has imposed steep tariffs on products from China worth tens of billions of dollars, and has threatened to target hundreds of billions more, on top of import taxes on steel and aluminium that have angered allies including the EU.

“Powell was pretty straightforward on the risks from the trade policy uncertainty though he tried to stay out of the political debate,” said Greg McKenna, chief market strategist at AxiTrader.

The Fed chief said US businesses were already being hurt by reciprocal tariffs on key products, pointing out: “The bottom line is a more protectionist economy is less competitive, less productive.”

However, he also said that if Trump’s trade policy resulted in lower tariffs, that would be good for the US economy.

In a sign of worsening tensions over the trade dispute, a senior economic adviser to Trump attacked Chinese President Xi Jinping for blocking an agreement to resolve the issue.

“I think Xi is holding the game up,” said Larry Kudlow, director of the White House National Economic Council. “I don’t think President Xi has any intention of following through on the discussions we’ve made.”

Elsewhere Thursday, oil prices reversed minor gains won thanks to US government data showing a fall in stockpiles of motor fuel.

“The gasoline numbers… raise supply concerns”, said Stephen Innes, head of Asia-Pacific trading at Oanda trading group.

Key figures

London – FTSE 100: FLAT at 7,677.79 points

Frankfurt – DAX 30: DOWN 0.4 percent at 12,714.03

Paris – CAC 40: DOWN 0.5 percent at 5,419.80

EURO STOXX 50: DOWN 0.3 percent at 3,475.51

Tokyo – Nikkei 225: DOWN 0.1 percent at 22,764.68 (close)

Hong Kong – Hang Seng: DOWN 0.4 percent at 28,010.86 (close)

Shanghai – Composite: DOWN 0.5 percent at 2,772.55 (close)

New York – Dow: UP 0.3 percent at 25,199.29 (close)

Pound/dollar: DOWN at $1.2996 from $1.3069 at 2030 GMT

Euro/dollar: DOWN at $1.1604 from $1.1639

Dollar/yen: UP at 112.97 yen from 112.86 yen

Oil – Brent Crude: DOWN 96 cents at $71.94 per barrel

Oil – West Texas Intermediate: DOWN 87 cents at $67.89 per barrel.

Published in Daily Times, July 20^th 2018.