LONDON: World stock markets faltered on Monday as traders eyed looming trade wars and worried about EU rifts over migration.
Spreadex analyst Connor Campbell said that “the latest twist in the US-China tariffs tiff last Friday continued to define trading”.
Frankfurt underperformed EU peers “with political tensions in Germany rising over an argument about migration”, noted Campbell. The euro stabilised versus the dollar after falling to 11-month lows on Friday. Tokyo earlier closed down almost one percent, while Shanghai and Hong Kong were closed.
Fresh fears of a trade war between the world’s top two economies have emerged after the United States and China imposed tit-for-tat tariffs on billions of dollars of imports.
Weakness in stock markets came “amid festering global trade concerns after the US and China traded tariff announcements last week,” said analysts at the Charles Schwab brokerage.
US President Donald Trump’s decision last week to hit China with 25pc levies was met with an immediate retaliation, moving the two closer to a trade war that could potentially batter the global economy. The announcement came despite weeks of talks between the two sides.
The developments had already sent stocks into the red across Europe and on Wall Street on Friday, and the weaker trend continued on both sides of the Atlantic on Monday.
In Europe, investors were also looking ahead to Tuesday, when French President Emmanuel Macron heads to Germany for talks with Chancellor Angela Merkel.
Merkel and Macron both agree on the need for a Europe-wide response to migrants, and are hoping to hammer out a policy acceptable to all member states that would ease the burden on Italy, Greece and other main entry points.
Hardliners in Merkel’s conservative bloc meanwhile gave her a two-week ultimatum to tighten asylum rules or risk pitching Germany into a political crisis. With traders fleeing to safer assets, the yen rose against the dollar.
Brent crude meanwhile rebounded after slumping last week, as investors fret over Russia and Saudi Arabia’s expected agreement to ramp up output at an Opec meeting that starts Friday.