Global Market Report - June 19

President Trump's threat of $200bn in trade tariffs sent Asian and European markets into a tailspin on Tuesday

James Gard 19 June, 2018 | 11:02AM
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Markets in the region felt the full force of the escalating trade rhetoric between the US and China. Trump’s threat of $200 billion in sanctions, and the immediate counterattack from China, pushed Chinese shares to a two-year low.

China’s Shanghai Composite Index has not been below 3,000 points since summer 2016 and today’s fall of nearly 4% was an abrupt dive beneath this key level.

Hong Kong’s Hang Seng lost over 800 points or nearly 3%, dragging the index below 30,000 points. The index has flirted with this level since February but has always managed to remain above it.

A weakening in the US dollar against the yen in recent days has weakened the case for Japanese equities, a problem compounded by the geopolitical noise surrounding the region. The yen was once again caught up in the demand for safe haven assets.


In times of market volatility, Germany’s Dax is often sold off sharply and it proved the same today as the index was the worst performing in the eurozone.

ECB President Mario Draghi will kick off a central banking conference which will feature the big names: Federal Reserve chair Powell and Bank of Japan Governor Kuroda will speak this week. Draghi’s opening remarks follow last week’s announcement that bond buying will be phased out moving into 2019. The gradualist slant to the tone last week encouraged euro sellers, particularly during a week when the Federal Reserve tightened interest rates for the second time this year.

Draghi today promised that eurozone monetary policy will remain “patient, persistent and prudent”.

The FTSE 100 was not spared the global selloff but its losses were tempered by a further softening of the pound against the dollar. The index was down 40 points at 7,589 in midmorning trading.

On the FTSE Allshare, shares in Debenhams (DEB) were the second biggest faller after a profits warning from the department store group. Retirement property specialist McCarthy & Stone (MCS) was the biggest faller, shedding nearly 15% as it also warned on full-year profits after a slowdown in sales.

North America

Dow futures suggest a 300 point drop at the open as trade war fears escalate. The Dow dropped through 25,000 points yesterday, a level that the index has struggled to hold above since the February selloff.

In terms of this week’s economics, Tuesday’s housing starts and building permits for June will be released. Crude oil inventories are in focus on Wednesday, while Canada’s inflation rate for May will be revealed on Friday. Provisional services and manufacturing PMIs will be in view on Friday.



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James Gard

James Gard  is senior editor for


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