Global stocks jolted over worries of a protracted trade war


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Global stocks jolted over worries of a protracted trade war

On Friday, the 31st of May 2019, a gauge of global stocks took a heavy tumble and safe-have sovereign bonds had been found surging after US President Donald Trump had put an unexpected punitive tariff on all Mexican imports up to 25 percent over a long-disputed migrant issue, which had rattled the global stocks and added to worries that trade wars on multiple fronts would punch US and other major economies into a recession.

Besides, following US Secretary of State, Mike Pompeo’s latest warning to Germany to stop backing Huawei Technologies alongside UK and France over his five-day-visit to Europe, Germany’s ten-year government bond, contemplated as one of the safest assets in the world, had toppled to a record low, while US treasury yields had also glided to a 20-month low.

Addressing to a surprise addition of US-Mexico tariff war over the narratives of ongoing EU-US and Sino-US trade abrasions, a head of global strategy at Aberdeen Standard Investment, Andrew Milligan said, “Very clearly when we all thought that the main trade tensions in the world were between the U.S.

and China or perhaps between the U.S. and Europe, we hadn’t realized there will be another trade tension with Mexico ... and it raises concerns about who the next country may be. It is a nasty slowdown; it looks likely to be taking longer than we thought.

Many had thought that the slow down would be in Q1 and the recovery in Q2, but clearly everything that we see in May is telling us this will be pushed back into Q3 or Q4”. Meanwhile, MSCI’s gauge of global index which keeps track of stock exchanges of 47 countries across the world had shed 0.76 percent, and the regional Pan-European STOXX had lost 0.81 percent, led by a retreat of auto-makers exposed to Mexico trade, including Volkswagen and Fiat Chrysler’s plunge of 3.6 and 5 percent respectively.

European banks exposed to Mexican trade had also languished lavishly including Santander, Bilbao and Sabadell. Quoting statistics, London’s FTSE had continued its losing streak, falling about 0.78 percent in alignment with French CAC 40 which shed 0.79 percent, and Germany’s trade-sensitive DAX was dwindled by 1.47 percent, while in Asia, Nikkei 225 was rammed by 1.63 percent over renewed trade tension, and Hang Seng lost 0.79 percent after China retaliatory tariff on $60 billion of US imports had taken place.

Besides, Bombay stock exchange had failed to regain some of its upbeat momentum over PM Modi’s oath-taking ceremony and shed 0.30 percent.