Just when it seemed that the tenuous trade ceasefire between the US and China could result in more stable market sentiment, European stocks dropped -0.5% to session lows led by mining and autos, with S&P futures sliding as volume surged, joining Asia in the red after Reuters reported that China would ask the World Trade Organization for permission to impose trade sanctions on the U.S. rekindling fears over trade relations among the world’s two biggest economies.
The latest trade rumbling pushed the MSCI index of global stocks into the red, as Asian markets dropped for the ninth straight day. The MSCI index of Asia-Pacific shares ex-Japan eased 0.05 percent, but held just above last July’s lows.
There was a hint that China may do something earlier when the Shanghai Composite dipped 0.2 percent, with the index fading all gains set during the morning session. Chinese automakers were among the worst performers in Hong Kong after August sales dropped from a year earlier, adding to investor jitters about the vehicle market’s outlook. Local auto giant Geely Auto fell as much as 4.6% to lowest since June 2017.
After opening broadly higher, European shares were down on the day, with the Stoxx 600 sliding as much as 0.5%, while the Stoxx 600 basic resources index dropped 0.7%, entering a bear market down 20% from its June 6 peak, amid speculation that winter curbs on mills may be milder than had been expected, increasing the possibility of increased supply.
The pound initially rose to five-week highs against the dollar, hitting a high of $1.3087, after the European Union’s chief negotiator Michel Barnier said on Monday a Brexit deal was possible within weeks. Sterling had risen 0.8 percent on Monday.
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