Article 3SMMV Markets recover but remain nervous over US-China trade dispute – as it happened

Markets recover but remain nervous over US-China trade dispute – as it happened

by
Graeme Wearden (until 2pm) and Nick Fletcher
from Economics | The Guardian on (#3SMMV)

All the day's economic and financial news, as investors worry that Donald Trump could trigger a full-blown trade war with China

5.46pm BST

The prospect of a trade war between the US and China has put markets under pressure this week, and although there was some recovery today, it was by no means convincing. As well as continuing uncertainty over the effect of the proposed tariffs, oil prices were volatile ahead of this week's Opec meeting. Meanwhile the pound edged a little higher after the UK government won a key Brexit vote. The final scores showed:

4.55pm BST

It's been a pretty volatile day for stock markets, as well as crude. And the pound has not been left out.

From a low of $1.3149 against the dollar it hit a high of $1.3215 after the UK government won a key Brexit vote. It is currently at $1.3206, up 0.21%.

Related: May wins 'meaningful vote' victory after lead rebel Grieve accepts compromise - Politics live

4.37pm BST

Oil prices are edging higher ahead of the key Opec meeting which begins on Thursday and following a bigger than expected fall in US crude stocks.

The oil producers are expected to agree to increase output but the key question is by how much. Meanwhile evidence of rising demand came from the weekly US figures, which saw a 5.9m barrel decline, the biggest drop since mid-January. On the other hand there was a 3.3m barrel rise in gasoline stocks compared to expectations of a 1m fall.

Crude oil is also in focus, with a whole raft of comments coming from OPEC member states ahead of Friday's big production decision. Despite an initial rebuttal of a production increase proposed by Russia (via Saudi Arabia), we are seeing a gradual shift in tone which will likely see some form of rise in output come Friday.

For markets, the line in the sand seems to be the 1 million barrels a day level. Anything less than that will be seen as a compromise given the Saudi target is closer to 1.5 million barrels a day. We have seen the biggest drawdown in US crude inventories since January, but the impact has been offset by a rise in gasoline supply.

4.29pm BST

Here's our first take on the David Drumm sentencing:

Related: David Drumm, former chief of Anglo Irish Bank, sentenced to eight years in jail

4.22pm BST

Back with the Anglo Irish case and former chief executive David Drumm has been sentenced to eight years in jail for his part in the fraud, but will serve six with mitigating circumstances taken into account.

3.30pm BST

Investor enthusiasm appears to be waning, with markets coming off their best levels. Connor Campbell, market analyst at Spreadex, said:

The Dow Jones, which at one point looked like it was going to reclaim 150 points, ended up starting the US session flat, the wrong side of 24700. There was little for the index to really work with on Wednesday, beyond the ever-looming threat of a full-blown trade war between the world's two largest economies.

The Eurozone, which started the week poorly and then went downhill from there, saw its initial tame recovery gradually chipped away at until nothing was left. That means the DAX is back struggling to keep its head above 12700, while the CAC tumbled below 5400 after switching from a 0.3% rise to a 0.2% loss.

3.28pm BST

US commerce secretary Wilbur Ross has been speaking about the trade dispute with China. He says President Trump's strategy is to make it clear to China that continuing on its current path would be more painful that changing its behaviour.

2.58pm BST

Back with the bids for 21st Century Fox, and Neil Wilson at Markets.com says the market is now waiting for Comcast's next move after Disney increased its offer:

As was expected, cash was added to the all-share offer as a sweetener and the deal is now worth $38 a share, up from its previous $28 offer that was worth c$55bn. This beats Comcast's $35 all-cash, $65bn bid but we must assume that Comcast is ready to come back with an even stronger offer.

This offer from Disney is probably a little bit stronger than expected and [Disney's] Iger will be looking to kill off Comcast's bid once and for all. However, the rationale for Comcast remains the same, the question is only how much debt it can afford to carry. If it gets its way total debt would rise to $170bn according to Moody's, with just $6bn in cash on its books. Disney will also take on Fox's $14bn debts, giving this bid an enterprise value of more than $85bn.

2.35pm BST

US markets have joined in the generally positive mood after the week's sell-offs as trade tensions between the US and China escalated.

The Dow Jones Industrial Average is currently up 80 points or 0.33%, while the S&P 500 opened up 0.325 and the Nasdaq Composite 0.5% better.

2.19pm BST

Back with trade disputes, and the European Union has confirmed it will begin charging import duties of 25% on a range of US products on Friday. The move is in retaliation to the US tariffs imposed on EU steel and aluminium.

The EU tariffs will be placed on a2.8bn worth of goods, from Harley Davidson motor bikes to bourbon and peanuts.

2.02pm BST

Over in the US, and the country's current account deficit widened in the first quarter, but by less than forecast. Reuters reports:

The Commerce Department said the current account deficit, which measures the flow of goods, services and investments into and out of the country, widened by $8.0 billion to $124.1 billion, or 2.5 percent of national economic output, in the first three months of the year.

Analysts polled by Reuters had expected the current account deficit to widen to $129.0 billion from the previously reported $128.2 billion in the fourth quarter.

1.46pm BST

Newsflash: The takeover battle over Rupert Murdoch's 21st Century Fox group has taken another twist.

Disney has raised its offer for most of 21CF to $38bn per share, up from a previous offer of $28 per share.

21st Century Fox accepted a sweetened, $38-a-share bid from Walt Disney Co. for its entertainment assets, dealing a blow to Comcast's efforts to acquire the business https://t.co/OvWVzbP7sV pic.twitter.com/cyWEyuv6S5

1.10pm BST

Over in Dublin, one of Ireland's fallen bank bosses is being sentenced over his role in the financial crisis.

Defence outlines all the people who knew about the transaction to some extent either in Anglo or the Central Bank other than Dd.

Now cv. Father died 64. Truck driver. Mother hairdresser recently retired. Left school 16. Then c.v. Says Dd complied with bail conditions and his case marked by media interest. Concludes "thanks very much."

Prosecution now discussing potential length of sentencing. 10 years max on one charge - other indefinite.

Debating 5 or 10 year maximum sentence and other legal matters. Referring back to previous trial of other 3 bankers and what was said or wasn't said.

Dd says "huge error of judgement" to authorise but did not see as crime. Says FR gave "tacit" if not specific approval. Says transaction grew as economic climate got worse.

Transaction has to be seen in context bank was facing "annihilation." Only happened after transactions passed "under the eyes" of professionals and civil servants. Nobody "raised a red flag" around publication of accounts

Arguing both charges based on same events and should be treated as same. Says nobody made "personal gain" was done to save the bank - and was "futile" as bank failed because of "overexposure to development loans."

12.44pm BST

Lukman Otunuga, research analyst at FXTM, says investors should be cautious about joining today's rally.

He points out that the trade spat between China and the US could escalates again soon.

Asian and European stocks rose today as markets attempted to shrug off trade war threats. While the improved risk appetite could elevate stock markets higher, the sustainability should be questioned as fears over trade tensions remain a key market theme.

Global equity bears could transform the current rebound into a classical dead cat bounce if trade tensions between the United States and China continue to escalate.

12.13pm BST

The US stock market is expected to rise when trading begins in a couple of hours, ending several days of losses.

The Dow is looking to snap a six day losing streak today. Dow Futures may be in for a rebound up 125-points right now.

11.59am BST

The Bank of England could face a major shake-up if Labour wins the next election.

Labour's shadow chancellor, John McDonnell, is unveiling a swathe of proposed reforms to Britain's central bank today.

John McDonnell says he will be recommending the GFC report to the Labour party "because I support it" -- in other words, he would like the Bank to have a productivity target - but it's for the party as a whole to decide.

McDonnell says he's on a "tea offensive" of the City of London to talk bankers and fund managers through Labour's economic plans. "Once we cut through some of the media coverage... we're generally finding we're on the same page."

He says Labour can "offer them [the City] a better way through Brexit which will protect jobs and the economy"

Since no MPC member thinks a@bankofenglanda(C) can boost productivity, they'd all have to resign if Labour won power
https://t.co/bZVXj4Oy1x

11.37am BST

Good news: UK factory orders have risen, helping manufacturers to boost their output.

The CBI's latest healthcheck on the sector has found that manufacturing order books recovered in the last quarter, while the volume of output increased strongly.

"The recovery in orders and a return to bumper growth in production suggests the lull in manufacturing activity may be over. While risks to demand persist from Brexit and escalating global trade tensions, firms can work with the Government to nurture a pro-enterprise environment that helps UK growth to shift up a gear.

11.13am BST

UK housebuilder Berkeley has called the top of the London housing market.

It is telling that some funders and builders are choosing to exit the market when faced with the degree of risk and regulation that now confronts development in the capital where macro and political uncertainty, including Brexit, are leading to this caution.

This is a great shame as London is a fantastic world-class city with unique attributes that will last long beyond the current hiatus which is only exacerbating the well documented under-supply.

10.33am BST

Stocks are recovering because investors are snaffling up bargains after Tuesday's rout, says Ken Odeluga of City Index.

European stocks are posting solid gains with similar demand building in Dow, S&P and Nasdaq contracts.

This follows chunks of buying interest in Asia-Pacific shares. It looked very much like bargain-motivated flows juiced by a window of benign currency conditions, particularly in Japan, Hong Kong, S. Korea and Australia where benchmarks all added around 1%. Chinese equities also enjoyed a bounce, though to a lesser extent, with precarious sentiment capping Shanghai and Shenzhen gains as investors read the PBoC stepping in as corroborating a sense of crisis. The central bank recommended a reserve ratio requirement cut-essentially looser policy-after fresh tariff threats.

10.17am BST

Elsewhere in the markets, cryptocurrency prices are falling after another digital coin exchange was hacked.

The South Korean cryptocurrency exchange Bithumb says it lost 35bn won ($31.5m) worth of virtual coins to hackers. It's the second such breach in a week, highlighting the risks of investing in crypto (as coins are virtually anonymous, they can be almost impossible to recover).

Related: South Korea's Bithumb loses $31.5m in cryptocurrency heist

Crypto update:#BITCOIN 6633.58 -0.94%#ETHER 526.23 -0.98%#BITCOINCASH 874.93 -1.81%#RIPPLE 0.531 -1.81%#LITECOIN 96.15 -1.88%#BTC #ETH #BCH #XRP #LTC

10.00am BST

Two hours into the trading day, and European markets are all comfortably higher.

Shares are up across the board, as traders shake off some of their fears about a devastating trade war.

Markets are taking a breath right now and retracing some of the moves over the past number of sessions. Whether this turns into a broader rally or the selloff is resumed remains to be seen. Stock markets are higher after support was found in the European session yesterday and US and Asian traders built on the foundations of that support.

9.35am BST

Sterling has hit a new seven-month low this morning, as the UK government faces another crunch vote over Brexit.

Parliament will vote on the EU withdrawal bill, the government's flagship piece of Brexit legislation, later today. And one group of MPs are refusing to drop their demand for a 'meaningful' vote in the scenario in which Britain can't agree a Brexit deal.

Related: Brexit: No 10 and rebels stand firm in row over 'meaningful vote'

9.11am BST

Those calming words from the People's Bank of China are helping markets recover from yesterday's rout.

In London the FTSE 100 has jumped by 80 points, or 1%, to 7683 (partly helped by a weaker pound).

On the trade front, we're likely to see a two month 'hibernation' as the US works through the legal process for the next $200bn of tariffs and China awaits the US' formal response.

8.53am BST

The boss of Wall Street giant Goldman Sachs has predicted that China and the US still step back from a devastating trade wars.

That's what you would do if it was a negotiating position, and you wanted to remind your counterparty just how much fire power you had to bring to the negotiation."

"I don't think we're in a suicide pact on this..."I suspect we're not going to cause the economies to collapse with Smoot-Hawley on steroids.

8.31am BST

China's stock market isn't the only one flirting with a bear market.

After days of losses, the Philippines PSI index has fallen almost 20% from its recent peak.

Philippine stocks may fall into a bear market as early as today amid record streak of outflows of 23 straight days. $40 billion in value wiped out this year from the country's biggest stocks pic.twitter.com/eZcFpBGl6j

8.22am BST

Donald Trump's threat to impose more tariffs on China is dominating the newspapers across Asia today.

The China Daily newspaper - often a good window into Beijing's thinking - has accuse the US of trying to hurt the Chinese economy.

"Faced with this heightened intimidation from the U.S., China has no choice but to fight back with targeted and direct measures aimed at persuading the U.S. to back off, since it appears that any concessions it makes will not appease the Trump administration, which wants to suck the lifeblood from the Chinese economy."

"Beijing will have to ensure that Washington is aware that there will be heavy price to pay every action it strikes against China if it is to avoid being a victim of the Trump administration's growing blood lust."

A raging fever of nationalism rising in the world's sole super power sends an alarming signal. Nationalism is a challenge to globalization. Rising nationalism and protectionism could hinder the process of globalization and jeopardize the world order.

The US often points an accusing finger at alleged economic nationalism of other countries including China, but now, the reality is that Trump's truculent nationalism is posing the biggest threat.

Epic trade-war front page from Apple Daily pic.twitter.com/8sSzk8IKdQ

8.07am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Related: Stock markets roiled as US-China trade dispute escalates

"China still has good economic fundamentals and resilient growth. The yuan is one of a few currencies that have appreciated against the US dollar this year.

"I'm fully confident about the health of China's capital market based on the fundamentals."

Shanghai Composite bouncing after a brutal Tuesday; trading close to the bubble burst lows... not a lot going right for #China at the moment.
Obviously this presents downside risks, but one question is where is the pain point for them to launch a new stimulus package? pic.twitter.com/ktTnJbXirg

Shanghai Composite bouncing after a brutal Tuesday; trading close to the bubble burst lows... not a lot going right for #China at the moment.
Obviously this presents downside risks, but one question is where is the pain point for them to launch a new stimulus package? pic.twitter.com/ktTnJbXirg

#China | PBOC Governor Yi Gang says China share price drop on Tuesday were mainly emotions ...nailed it.

Global GDP could stand to be hit by 2% - 3% should the trade war continue and spread, to put this into context the Great Recession wiped out 6% of the global GDP, so this trade spat is by no means insignificant.

For weeks the market has been relatively complacent that Trump's tough protectionist rhetoric were merely a negotiating tool; however, the realisation that the US President is willing to go ahead with his threats has sent a shiver through the markets.

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