AFP, Reuters /London
Equity markets on both sides of the Atlantic slid yesterday as investors fretted over the latest flare-up in the China-US trade war.
Eurozone heavyweights Frankfurt, Paris and London were each down at the close.
The DAX 30 dropped 1.6% at 12,041.29 points and the CAC 40 fell 1.5% at 5,358.59 points, while the FTSE 100 lost 0.5% at 7,310.88 points. Italian stocks slid 2.7%, weighed on by Intesa Sanpaolo declining as it traded ex-dividend.
The EURO STOXX 50 closed 1.6% down at 3,369.78 points.
Tech stocks were the STOXX 600’s top losers, diving 2.8%. AMS, STMicroelectronics, and ASML were down between 6.3% and 13.4% as fears of a disruption to the industry’s global supply chain grew. German chip maker Infineon trimmed intra-day losses to end 4.8% lower after denying a report in Japan’s Nikkei daily that it had suspended deliveries to Huawei.
Stocks of tariff-sensitive auto-makers and their suppliers shed 2% to clock their lowest closing level in more than a month and a half.
Banks fell 1.6%, with Deutsche Bank tumbling 2.9% to a record closing low.
Telecom stocks were the STOXX 600’s only gaining sub-sector, rising 0.8%.
Vodafone Group climbed 1.7% on the day, after recording its lowest closing level in close to 10 years on Friday.
Viennese stocks slid 1.4% after Austria’s president called for a snap election in September following the resignation of the country’s far-right vice chancellor over a video sting.
Travel and leisure stocks slid 1.4%, with Ryanair diving 4.6% after the low-cost airline posted its weakest annual profit in four years and said earnings could fall further.
On Wall Street, the Dow Jones index was 100 points lower in the late New York morning.
“US stocks are lower, along with European markets, with chip-related companies pressuring the technology sector on concerns about the fallout from escalated trade tensions, exacerbated by the ripple effect of US actions taken against Chinese telecom giant Huawei,” the Charles Schwab brokerage said in a note.
In the midst of a trade war with Beijing, President Donald Trump has barred US companies from doing business with foreign companies said to threaten American national security.
US Internet giant Google, whose Android mobile operating system powers most of the world’s smartphones, then announced that it was beginning to cut ties with China’s Huawei, which Washington considers a national security threat.
“Equity markets are in the red... as dealers are still worried about the trade standoff between the US and China,” said analyst David Madden at trading firm CMC Markets UK.
“The fact that Washington has effectively blocked Huawei from the US market is likely to drag out the trade dispute, and the prospect of a quick solution seems slim.”
The move could have dramatic implications for Huawei smartphone users, as the Chinese telecoms giant will no longer have access to Google’s proprietary services — including Gmail and Google Maps apps — a source close to the matter told AFP.
Reports also emerged Monday that several US chipmakers providing vital hardware for Huawei’s smartphones have stopped supplying the Chinese firm.
SEB emerging markets strategist Per Hammarlund said that the latest development made it unlikely that Beijing and Washington would end their dispute in the runup to next month’s G20 summit in Japan. “Chances of a breakthrough before the G20 summit... are very small, with both sides likely reassessing their strategies following the failure to reach an agreement in Washington — and the move by the US to blacklist Huawei,” Hammarlund said.
However, most Asian markets rose yesterday after Trump showed signs of conciliation elsewhere.
Global markets have been in turmoil for two weeks since Trump threatened — and later delivered — a hike in tariffs on Chinese imports, to which Beijing retaliated.
The move also threw a spanner in the works for long-running negotiations between the economic superpowers that were thought to have been close to conclusion.
But there was a sliver of hope after Trump on Friday removed steel tariffs on Canada and Mexico and announced a six-month delay in imposing steep tariffs on auto imports as he seeks talks with Japan and the EU on the issue.
Meanwhile, Mumbai equities and the rupee soared on the back of exit polls suggesting business-friendly Prime Minister Narendra Modi was on course to be re-elected.
Sydney stocks and the Australian dollar rallied after a shock win for the conservatives, while Japanese dealers were cheered by forecast-beating GDP data.
However, the pound was wallowing near four-month lows on fears Britain will leave the European Union in October without a divorce deal.
In commodities, oil prices rose after Saudi Arabia and the UAE said they would stick to output caps agreed with Russia.
The news came as tensions between the US and Iran increase, fuelling concerns about supplies from the crude-rich Middle East.
The New York Times on Sunday reported anti-money laundering specialists at the German lender recommended in 2016 and 2017 multiple transactions involving entities controlled by US.
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