Global shares extend fall on Trump trade threats
September 1, 2018
NEW YORK (Reuters) - Global stocks ended August much as they began the month - under the dark cloud of a potentially worsening trade war. A closely watched barometer of equities worldwide fell for a second day after the United States and Canada failed to reach a trade deal and a report that US President Donald Trump was preparing to step up a trade war with Beijing. The news dampened risk appetite and erased some gains from a rally this week. “It’s very hard to see a decisive resuscitation of risk appetite until these tensions are resolved,” said Paul O’Connor, head of the multi-asset team at Janus Henderson Investors. “We have learned to under-react to some of the individual headlines because if you try to extrapolate from any of them you could find yourself in big trouble.” The MSCI All-Country World Index .MIWD00000PUS, which measures stocks in 47 countries, shed 0.34 percent for the day, but eked out a 0.7 percent return for the month, including dividends. The index’s modest rise masked a chasm between US and emerging markets. The S&P 500, which includes large US companies, is up nearly 3 percent for the month, while the MSCI Emerging Markets index .MSCIEF is down by roughly the same margin. Earlier, Dow Jones Industrial Average fell 22.1 points, or 0.09 percent, to 25,964.82, the S&P 500 gained 0.39 points, or 0.01 percent, to 2,901.52 and the Nasdaq Composite added 21.17 points, or 0.26 percent, to 8,109.54. Canada and the United States failed to reach a deal to update the North American Free Trade Agreement, with US Trade Representative Robert Lighthizer saying in a statement that US officials would resume talks with their Canadian counterparts next Wednesday. The United States and Mexico, the other NAFTA member, have already come to an agreement. Meanwhile, Trump is ready to impose tariffs on another $200 billion in Chinese imports as soon as a public comment period on the plan ends next week, Bloomberg News reported on Thursday, citing unidentified people. The White House declined to comment. Trump, in an interview with Bloomberg, also threatened to withdraw from the World Trade Organization if “they don’t shape up,” a move that would further undermine one of the foundations of the modern global trading system. Oil, which could see less demand if trade tensions slash economic growth, settled lower. Brent LCOcv1 was down 0.45 percent to $77.42 per barrel. Trade anxieties boosted the dollar, seen as a short-term winner if the United States reduces imports. The greenback .DXY rose 0.4 percent against an index of its peers. The Mexican peso lost 0.02 percent versus the US dollar and the Canadian dollar fell 0.50 percent.