Chinese media up ante in trade war
My colleague Lily Kuo reports from Beijing:An editorial in the People’s Daily on Wednesday accused the US of “bullyism”, while a bulletin on the state broadcaster CCTV said the US was “delusional” if it believed “technological bullying” could contain China. “This shows some American politicians are extremely narrow-minded and cannot tolerate the normal pursuit of development and progress of other countries,” the announcer said.
The harsher sentiments appear to be resonating with the public. Earlier in the week, a song written by a former Chinese official about the trade war, set to the tune of a fight song featured in an anti-Japanese wartime film, had been viewed thousands of times on WeChat.
A clip of a CCTV news segment from last week promising that China would “fight to the end” was one of the top viewed posts on the microblogging site Weibo. And last weekend, a CCTV film channel aired a series of documentaries about the Korean war, when Chinese and US forces clashed. “We are using movies to echo the current era,” the broadcaster said on its Weibo account on Saturday.
China: Trade talks can't continue unless US approach changes
Ministry of Commerce spokesperson Gao Feng has declared that negotiations can’t continue unless Washington changes its position, and amends its mistakes.
He told reporters:“If the U.S. would like to keep on negotiating it should, with sincerity, adjust its wrong actions. Only then can talks continue.:
That sounds like a significant move - is Beijing really refusing to hold fresh talks unless Donald Trump backs down?China is firmly opposed to this. We will closely monitor developments and make adequate preparations.”
Our model enables people to support us in a way that works for them. Readers’ support safeguards our essential editorial independence.
Make a contribution - The Guardian
Metro Bank chairman under pressure to quit
But it’s not all good news at the challenger bank, which has been warned it will face renewed pressure to give its chairman the boot:
Royal London Asset Management, which holds a 0.39% stake worth approximately £3.1m, said: “The high number of votes against directors at Metro Bank’s AGM should send a strong and clear signal that many of the company’s shareholders want to see decisive governance reform.
The bank is still nursing wounds from Tuesday AGM, which attracted protest votes across the board. Every resolution attracted at least 7% of votes against, if not more. You can see those votes here.“We support the move by the board to review the contract with InterArch, the company run by the chairman’s wife. However, we still strongly believe that the appointment of a new independent chairman to lead governance reforms would go some way towards strengthening oversight, and restoring investor and customer confidence in the bank.
“We have communicated our views with the company and will continue to engage with the board over the coming months.”
Brexit anxiety has pushed the pound down by another 0.2% against the euro again to just €1.1307, the lowest since January.
This is its 14th day of losses in a row - its worst-ever run.
Pound tumbles as no-deal Brexit fears grow
The pound has slumped to $1.262 against the US dollar, down another half a cent.
That’s its lowest level since the first week of January, as pressure continues to mount on Theresa May to resign following the resignation of House of Commons leader Andrea Leadsom last night.
Theres’s speculation that May could finally quit on Friday, once today’s European elections are concluded.
Traders are reacting to the prospect that May is replaced by a hard-line Brexiteer who will push Britain towards leaving the European Union without a deal.
He also thinks it could plunge close to parity against the euro, near a record low.
Turner says:“Investors should not be complacent about the threat of a no-deal exit, which we believe would take the pound as low as $1.15 and 0.97p versus the euro.”
Ongoing Brexit deadlock will also hurt the economy, he adds:“Despite mounting public impatience over the process, many top officials and lawmakers remain fearful of the economic damage from a no-deal exit.
“Lingering uncertainty would likely cause firms to delay investment, and keep sterling under downward pressure.”
The index, which contains more UK-focused companies than the blue-chip Footsie 100, has shed 235 points, or 1.2%, to 19,072.
Consumer-focused firms, and industrial and technology companies are the worst-performing sectors, hit by Brexit worries and the US-China trade war.
TUI slides as Brits favour 'staycations'
Brexit fears are partly to blame. The slump in the pound in recent days may be deterring people from heading to Europe this summer, and a no-deal Brexit would disrupt its operations.
TUI is also suffering from a new survey showing that more Britons will choose to stay at home this summer.
A survey of 2,006 domestic tourists from Barclays found that 31% said they were likely to spend more time on holiday in the UK this year, compared to just 8% who said they would spend less time.
Some cited concern over the impact that Brexit could have on foreign travel and family finances.....
Eurozone factories hurt by trade war
Data firm Markit has reported that eurozone factory sector is shrinking again this month. Output fell for the fourth month in a row, while new orders shrank for the 8th consecutive month.
This dragged Markit’s manufacturing PMI down to 47.7 for May, below the 50-point mark that shows stagnation.
Worryingly, factory bosses are now laying off staff -- manufacturing jobs fell for the first time since August 2014, lost at the fastest rate since November 2013.
In better news, the service sector (which makes up the bulk of the economy) continued to grow, keeping the overall eurozone PMI in growth territory.
Worries reflected concerns over lower economic growth forecasts, signs of weaker sales and rising geopolitical uncertainty, with escalating trade wars and auto sector woes commonly cited as specific causes for concern.
Some Chinese manufacturers are reportedly moving parts of their production abroad, to avoid US tariffs.
Paul Donovan of UBS Wealth Management explains:Vietnam is benefitting from the US tax increases; exports to the US surged. Anecdotal evidence suggests Chinese companies are shifting part of their production to Vietnam, Indonesia and Thailand.
The shift may be small, but if it is the final stage of production the boxes are labelled “made in Vietnam” and trade taxes are evaded.
Trade war worries hit European stocks
Germany’s DAX has slumped by 1%, with nearly every share in the red. It’s being dragged down by major exporters such as steel maker Thyssenkrupp, chemicals firm BASF and carmaker Volkswage and Daimler.
Britain’s FTSE has shed more than 50 points, or 0.75%. Companies vulnerable to a no-deal Brexit, such as holiday firm TUI (down 4.6%) are leading the selloff.
Panasonic become the latest company to deal a blow to the Chinese tech giant, joining EE, Vodafone, Qualcomm, Intel and, most importantly, ARM on the list of firms scaling back or outright severing their relationship with Huawei following the US blacklisting.
Whatever relief was generated by the announcement a 90-day grace period earlier in the week has completely dissipated, as investors fret over the damage this nascent tech Cold War is doing to the chance of a positive outcome to the US-China trade battle.
Many analysts had confidently expected a deal by now. But those hopes have faded since negotiations all-but-collapsed earlier this month.
Now, economists are calculating the impact if president Trump triggers his threat to impose tariffs on all remaining Chinese imports - including mobile phones and laptops.
Bloomberg is reporting that a full-blown trade war is now looking more likely - almost a ‘base case’ scenario, not a tail risk:After months of predicting a trade deal between the world’s two largest economies, economists at some of the biggest financial institutions are growing increasingly pessimistic.
Goldman Sachs Group Inc., Nomura Holdings Inc. and JPMorgan Chase and Co. are among those that have rewritten their forecasts as U.S. President Donald Trump threatens to impose a 25% tariffs on around $300 billion of additional Chinese imports.....
Goldman Sachs economists warned that without signs of progress over coming weeks, implementation of the further tariffs could easily become their base case. “While we still think an agreement is more likely than not, it has become a close call,” they wrote.
Asian markets hit four-month lows
The CSI 300 index has slumped by 1.8% in late trading. The technology sector led the selloff, down 3.3% on average, following the news that Panasonic was freezing Huawei out.
Consumer-focused firms and telecoms operators are also among the big fallers.
This has dragged Asian stocks down to a four-month low this morning. Hong Kong is down 1.8%, while Australia has dipped by 0.3%.
Neil Wilson of Markets.com says anxiety over a trade war is building.Trade is still front and centre for equity markets with the mood looking increasingly downbeat.
It rather seems the US and China are hunkering down for the long haul – a new long march, to borrow the phrase from yesterday.
Panasonic joins Google, Intel, Qualcomm and Lumentum among the leading companies to turn their backs on Huawei in what is beginning to shape up as a tech cold war between the US and China.
Introduction: Panasonic adds to Huawei's problems
Tensions between Beijing and Washington continue to deteriorate, as the crackdown on Huawei adds fuel to their ongoing trade war.
Overnight, Japan’s Panasonic has become the latest tech firm to cut back on its business with Huawei. It’s a response to the White House’s move to ban Huawei from buying technology from US companies without its approval.
Panasonic says:Panasonic announced in [an] internal notification that it should suspend transactions with Huawei and its 68 affiliates that were banned by the US government.
Foreign minister Wang Yi has hit back against the flurry of attacks on Huawei, accusing the US of “typical economic bullying”, and trying to undermine Chinese firms.
In a hard-hitting statement, he says:“Some people in the United States do not want China to enjoy the legitimate right to develop, and seek to impede its development process.
Wang also insisted that Beijing will not back down, declaring:“If the United States is willing to negotiate on an equal footing, then on the Chinese side, the door is wide open. But if the United States opts for a policy of maximum pressure, then China will take them on and fight to the end.”“This extremely presumptuous and egocentric American approach is not able to gain the approval and support of the international community.”
Europe is expected to open lower, ahead of new PMI surveys of the eurozone private sector and a healthcheck on German businesses.
City traders will also be watching Westminster closely, as Theresa May tries desperately to cling on as prime minister.
Sterling has already fallen against the euro for 13 days on the trot, and is weaker again this morning.
- 9am BST: Eurozone flash PMI for April
- 9am BST: IFO survey of German business expectations
- 1.30pm BST: US weekly jobless claims
- 3pm BST: US flash PMI for April