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StockBeat - Trade War Escalation Keeps Markets Under Pressure

By Geoffrey Smith

Investing.com -- It’s a tale of woe across Europe’s stock markets again on Monday, with a familiar cause.

The evidence that President Donald Trump’s trade war is choking the global economy is increasingly hard to ignore, and stock markets everywhere are pricing in a sharp slowdown in growth.

The benchmark Euro Stoxx 600 was down 2.7 points, or 0.6%, at 366.38 as of 4 AM ET (0800 GMT), its lowest since mid-February.

The latest moves come after China published a policy paper on trade at the weekend accusing the U.S. of “intimidation”, “coercion” and “exorbitant demands”. China has also started an investigation into the practices of FedEx (NYSE:FDX) in the country, citing customer complaints.

The impact of the trade dispute is taking an increasingly heavy toll on global manufacturing. Purchasing managers surveys released so far on Monday showed that activity in Japan and the euro zone contracted again in May,

Markets have barely recovered since Thursday, when Trump unexpectedly resorted to using the threat of import tariffs in his long-running efforts to pressure Mexico into stopping illegal immigration into the U.S.

Among individual movers in early trading, German chipmaker Infineon (DE:IFXGn) fell to the bottom of the Dax after announcing the $9 billion acquisition (including debt) of U.S. rival Cypress (NASDAQ:CY).

Also in Germany, Deutsche Bank (DE:DBKGn) shares fell below 6 euros for the first time as the yields on German government debt also collapsed to their lowest ever in the latest wave or risk-aversion. Germany is suffering some unaccustomed political volatility after the resignation at the weekend of Andrea Nahles from the head of the Social Democratic Party. Press reports suggest that the new SPD leader will pull the party out of the coalition with Chancellor Angela Merkel’s Social Democrats, triggering new elections.

Elsewhere, the U.K. FTSE 100 is down 0.9% and the French CAC 40 down 0.7%.


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