BEIJING: Global stock markets tumbled Wednesday as 2019 trading began with news of weaker Chinese manufacturing.
KEEPING SCORE: In early trading, France’s CAC 40 plunged 2.3 percent to 4,618.90 and Germany’s DAX retreated 1.1 percent to 10,441.67. On Monday, the CAC rose 1.1 percent but it ended 2018 down about 11 percent. London’s FTSE 100 retreated 0.1 percent for an annual loss of 12.5 percent. Germany’s DAX rose 1.7 percent Friday on its last trading day of 2018 but ended the year down 18 percent. On Wall Street, the future for the Standard & Poor’s 500 index was off 1.9 percent and that for the Dow Jones Industrial Average also was down 1.9 percent.
ASIA’S DAY: The Shanghai Composite Index fell 1.2 percent to 2,465.29 and Hong Kong’s Hang Seng lost 2.8 percent to 25,130.35. Seoul’s Kospi gave up 1.5 percent to 2,010.00 and Sydney’s S&P-ASX 200 sank 1.2 percent to 5,557.80. India’s Sensex shed 1.2 percent to 35,817.25 and Singapore and Taiwan also declined. Bangkok and Manila advanced. Tokyo’s markets were closed.
CHINESE FACTORIES: A government survey and one by a major business magazine showed Chinese manufacturing weakened in December as global and domestic demand cooled. Forecasters said that could send shockwaves through Asian economies that supply raw materials and components. Chinese export growth has held up as producers rushed to fill orders before possible new U.S. tariff hikes in Washington’s trade battle with Beijing, but forecasters said that effect may be fading.
ANALYST’S COMMENT: The Chinese slowdown “raises a few red flags,” said Mizuho Bank’s Vishnu Varathan in a report. The slide is “potentially symptomatic of far sharper underlying demand pullback,” said Varathan. China’s extensive trade ties with its neighbors mean it “will reverberate more widely to other Asian exporters.”
US-CHINA TRADE TALKS: Investors are looking ahead to talks this month aimed at settling a U.S.-Chinese tariff battle that threatens to dampen global economic growth. Presidents Donald Trump and Xi Jinping agreed Dec. 1 to a 90-day suspension of further tariff hikes in their fight over Beijing’s technology policy but left in place penalties already imposed. No date has been announced but both sides have expressed interest in a settlement. Economists say the 90-day window is likely too small to resolve the full range of issues that bedevil their relations.
NORTH KOREA: Leader Kim Jong Un expressed hope for extending nuclear talks with Trump this year but said Pyongyang is ready to take a different path if Washington “misjudges the patience of our people.” Some analysts say North Korea has been trying to drive a wedge between Washington and Seoul and put the burden for action on the United States. Pyongyang has accused Washington of failing to respond to its dismantling of a nuclear testing ground and suspension of nuclear and long-range missile tests.
CHINA-TAIWAN: Xi said Beijing is “willing to create a vast space for peaceful unification” with Taiwan but warned the mainland will not tolerate moves toward formal independence for the self-ruled island. The two sides split in 1949 after a civil war but have extensive trade and investment ties. Taiwanese President Tsai Ing-wen said Monday gains by a Beijing-friendly opposition party in local elections “absolutely don’t mean” the island’s public “want us to give ground on our autonomy.”
CURRENCY: The dollar declined to 108.98 yen from Monday’s 109.67. The euro retreated to $1.1441 from $1.1466.
ENERGY: Benchmark U.S. crude lost 76 cents to $44.65 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 8 cents on Monday to close at $45.41. Brent crude, used to price international oils, slumped 94 cents to $52.86 per barrel in London. It added 59 cents the previous session to close at $53.80.
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