Speculation that the Australian central bank could slash already record-low interest rates has hit the local dollar (STR)
London (AFP) – Europe’s stocks fell for the most part Wednesday as traders once again warily eyed US-China trade concerns, dealers said.
Sentiment was also jarred after the OECD cut its 2019 global economic growth forecast, citing simmering trade tensions and Brexit uncertainty.
“A mixed session in Europe highlights the ongoing uncertainty as traders look around for market drivers,” said IG analyst Joshua Mahony.
“The US-China trade issue remains a core driver of market sentiment, with hopes of a breakthrough this month driving the bullish sentiment throughout US stocks in particular.
“However, with this current lull in US-China trade talks, we are starting to see some doubt creep in.”
A Shanghai rally led gains across most Asian markets as Chinese investors nevertheless grew increasingly optimistic over trade talks with the US.
With expectations that Washington and Beijing will eventually strike a tariffs deal already baked into equity prices, analysts say officials will need to provide some clarity on progress to give markets another step up.
There are also warnings that with optimism so high, there could be a lot of disappointment if the final deal does not live up to the hype, or the two sides fail to reach an agreement.
The talk is that high-level negotiations are ongoing in order to pave the way for a signing ceremony between Donald Trump and Xi Jinping later this month.
“A mid-March meeting… remains the expected next step, but if trade representatives are unable to agree on the final terms of implementation and enforcement measures, we could see the trade truce rally fade,” said Oanda analyst Edward Moya.
After a slow start Shanghai closed 1.6 percent higher to build on Tuesday’s rally, which came on the back of the Chinese government’s decision to slash taxes and ramp up spending.
– OECD downgrades forecasts –
In Europe on Wednesday, the Organisation for Economic Co-operation and Development lowered its global economic growth forecast to 3.3 percent for this year, down from the 3.5 percent it predicted in November.
“High policy uncertainty, ongoing trade tensions, and a further erosion of business and consumer confidence are all contributing to the slowdown,” the OECD said in an interim version of its Economic Outlook.
The OECD, which groups the world’s top developed economies, revised growth estimates lower for almost all of the countries in the G20 group of industrialised and emerging nations.
Britain’s growth forecast, which was based on the assumption of a smooth Brexit, was chopped from 1.4 to just 0.8 percent.
If Britain crashes out of the European Union without a deal on future economic relations, the OECD warned that its outlook would be “significantly weaker”.
– Key figures around 1145 GMT –
London – FTSE 100: UP 0.1 percent at 7,187.42 points
Frankfurt – DAX 30: DOWN 0.2 percent at 11,599.87
Paris – CAC 40: DOWN 0.2 percent at 5,288
EURO STOXX 50: DOWN 0.1 percent at 3,322.85
Tokyo – Nikkei 225: DOWN 0.6 percent at 21,596.81 (close)
Hong Kong – Hang Seng: UP 0.3 percent at 29,037.60 (close)
Shanghai – Composite: UP 1.6 percent at 3,102.10 (close)
New York – Dow: DOWN 0.1 percent at 25,806.63 (close)
Pound/dollar: DOWN at $1.3146 from $1.3178 at 2200 GMT
Euro/pound: UP at 85.99 pence from 85.81 pence
Euro/dollar: DOWN at $1.1304 from $1.1308
Dollar/yen: DOWN at 111.86 yen from 111.89 yen
Oil – Brent Crude: DOWN four cents at $65.82 per barrel
Oil – West Texas Intermediate: DOWN 41 cents at $56.15
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