Chinese markets slip as consumer prices rise to 15-month high
Mainland Chinese shares slipped on the day, with the Shanghai composite declining 0.56% to close at 2,909.38 and the Shenzhen component shedding 0.92% to end its trading day at 8,954.72. The Shenzhen composite also fell 0.639% to close at 1,528.40.
Official Chinese inflation data showed the producer price index in the country rising 0.6% year-on-year in May, meeting expectations of analysts in a Reuters poll. The consumer price index also rose 2.7% year-on-year in the same period, its fastest pace since Feb 2018 and in line with analyst expectations.
Hong Kong’s Hang Seng index dropped more than 1.7%, as of its final hour of trade, as protests continued in the city on Wednesday over the contentious China extradition law. Lawmakers in Hong Kong were originally set to discuss the proposal Wednesday morning, but the legislature announced in a statement on its website that the meeting would be “changed to a later time,” without offering a reason.
Elsewhere, the Nikkei 225 in Japan slipped 0.35% to close at 21,129.72, with shares of conglomerate and index heavyweight Softbank Group dropping 2.4%.The Topix index also fell 0.45% to finish its trading day at 1,554.22.
Over in South Korea, the Kospi slipped 0.14% to close at 2,108.75, while Australia’s ASX 200 shed earlier gains to end its trading day Down Under just below the flatline at 6,543.70.
Asia-Pacific Market Indexes Chart
|NIKKEI||Nikkei 225 Index||NIKKEI||21129.72||-74.56||-0.35|
|HSI||Hang Seng Index||HSI||27308.46||-480.88||-1.73|
|ASX 200||S&P/ASX 200||ASX 200||6543.70||-2.60||-0.04|
|CNBC 100||CNBC 100 ASIA IDX||CNBC 100||7840.98||-61.67||-0.78|
U.S. President Donald Trump said in a tweet that the dollar is at a “big disadvantage ” against other major currencies such as the euro.
“The Euro and other currencies are devalued against the dollar, putting the U.S. at a big disadvantage,” Trump tweeted, adding the U.S. Federal Reserve doesn’t have “a clue.” The dollar fell slightly against the euro following Trump’s tweets.
Trump’s comments come amid increasing investor expectations that the Fed could cut interest rates in the coming months, though one analyst told CNBC the U.S. central bank is likely to “continue to sit on the fence.”
“I think all this talk about the Fed being ready to cut is actually very, very counterproductive and it’ll be a race to the bottom. I don’t think things are that dire at all. I think there’s still quite a lot of ammunition in the United States,” David Marsh, chairman and co-founder at OMFIF. “The economy hasn’t slowed by that much.”
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.637 after trading between 96.6 and 96.9 yesterday.
The Japanese yen traded at 108.33 against the dollar after scaling levels above 108.6 in the previous session, while the Australian dollar changed hands at $0.6951 following an earlier high of $0.6963.
Oil prices declined in the afternoon of Asian trading hours, with the international benchmark Brent crude futures contract slipping 1.64% to $61.27 per barrel and U.S. crude futures falling 1.73% to $52.35 per barrel.
— Reuters, along with CNBC’s Fred Imbert and Kelly Olsen, contributed to this report.
European stocks close lower after US and China take tough trade stances
The pan-European Stoxx 600 was down 0.26% during the session, oil and gas stocks leading losses with a 2.1% decline, while banks fell 1.1%. Media stocks were the strongest performer with a 0.7% gain.
European Markets: FTSE, GDAXI, FCHI, IBEX
Asian stocks slid Wednesday after Wall Street ended a 6-day winning streak overnight, with China’s consumer price index rising 2.7% year-on-year. Hong Kong’s Hang Seng index led losses with a 1.59% drop by the afternoon as protests continued over the contentious Chinese extradition law.
Back in Europe, both Mario Draghi, the president of the European Central Bank (ECB) and Christine Lagarde, the managing director of the International Monetary Fund (IMF) warned about the global trade dispute Wednesday.
In the U.K., Sterling edged towards a three-week high Wednesday as the main opposition Labour party announced plans to introduce parliamentary legislation to block the country exiting the European Union without a deal in place.
In corporate news, French technology giant Dassault Systemes has agreed to acquire Medidata Solutions in an all-cash deal worth $5.8 billion on an enterprise value basis. Dassault shares fell 1.1%.
Senior lawmaker Nicky Morgan, chair of the Treasury Select Committee, requested information from influential British stockbroker Hargreaves Lansdown about its links to the Woodford Equity Income fund, which was suspended last week amid a raft of bad stock calls and investor withdrawals.
Shares of German publisher Axel Springer soared 11.5% after U.S. private equity firm KKR offered to buy out its minority shareholders.
At the other end of the European blue chip index, British American Tobacco (BAT) saw its shares fall almost 4% after warning on Wednesday of steeper declines in global cigarette sales.
Stocks slide as tech shares come under pressure, putting the June rally on hold
The Dow Jones Industrial Average dipped 40 points while the S&P 500 closed 0.2% lower. The Nasdaq Composite lagged, sliding 0.4%.
Tech shares were dragged down by chip stocks. The VanEck Vectors Semiconductor ETF (SMH) dropped 2.2% as Lam Research lost 5.3%. Applied Materials, KLA-Tencor and Teradyne also fell. Semiconductor stocks were pressured after an Evercore ISI analyst said a recovery in the space will likely be pushed back to the second half of 2020.
Facebook shares dropped 1.7% after a Wall Street Journal report showed the company uncovered emails linking CEO Mark Zuckerberg to the company’s privacy practices.
Wednesday’s declines come after muted trading action in the previous session. The Dow closed marginally lower on Tuesday, snapping a six-day winning streak.
Market focus remained largely attuned to global trade developments on Wednesday, after President Donald Trump said Tuesday that he was holding up a trade deal with China and had no interest in moving ahead unless Beijing agreed on as many as five “major points.” Trump did not specify these trade issues.
Washington and Beijing have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment.
“Momentum can carry this market higher especially into the Trump/Xi G20 summit, but the bigger (and longer-term more important) question regarding whether the economic expansion is coming to an end remains unclear, and as such it’s not the time to be overly aggressive in portfolios,” Tom Essaye, founder of The Sevens Report, said a note.
Wall Street also kept an eye on economic data as investors increasingly price in a rate cut from the Federal Reserve. Market expectations for lower rates by July were at 85.3% on Wednesday, according to the CME Group’s FedWatch tool. Low inflation, coupled with weak economic data, led to the possibility of lower Fed rates.
U.S. consumer prices rose just 0.1% last month, matching a Reuters estimate, the Labor Department said Wednesday. Core inflation, which strips out volatile components like food and energy prices, also rose 0.1%. The muted inflation numbers follow weaker-than-forecast employment and manufacturing data released last week.
“We’re seeing some increased volatility and that’s something we have not experienced really for quite a while,” said Paul Springmeyer, head of investment at U.S. Bank Private Wealth Management. “From an investor standpoint ... the anticipation of what the Fed may or may not do is largely behind it.”
Bank shares fell along with Treasury yields. Citigroup dropped 1.6% while J.P. Morgan Chase and Bank of America slid 1.3% and 1%, respectively. The benchmark 10-year yield fell to 2.12%.