Global equity markets fell on Monday after U.S. President Donald Trump’s remarks over the weekend dashed investor optimism that Washington and Beijing would soon reach a deal to end their trade war.
Moody’s warning on Britain’s sovereign debt weighed on shares in London, while escalating violence in Hong Kong led Asian equities to their biggest daily decline since August, boosting demand for the safe-haven yen and Swiss franc.
Trump said on Saturday that the U.S.-Sino trade talks were moving along “very nicely” but more slowly than he would have liked. He also said there had been incorrect reporting about U.S. willingness to lift tariffs.
Last week, U.S. and Chinese officials said they had agreed to roll back tariffs already in place in a “phase one” trade deal.
The 16-month trade war between the world’s largest economies has slowed global growth. Data over the weekend showed that China’s producer prices fell the most in more than three years in October.
“It’s difficult to say who stands to lose more from this deal falling apart, but this last-minute jostling does not inspire confidence,” said Craig Erlang, senior market analyst at PANDA Corp.
“We swing from optimism to pessimism on a daily basis and never feel any the wiser,” Erlang said.
Canada’s main stock index finished flat on Monday, dragged by energy companies tracking lower oil prices, while investors stayed cautious on renewed uncertainty over a trade deal between Washington and Beijing.
The Toronto Stock Exchange’s S&P/TSX composite index was up 5.41 points, or 0.03 per cent, at 16,882.83.
Six of the index’s 11 major sectors were fell, led by the health care sector which dropped 2.2 per cent
Energy stocks dropped 0.3 per cent as crude prices fell.
The financials sector finished narrowly lower, while the materials sector, which includes precious and base metals miners, slipped 0.3 per cent.
Open Text Corp. rose 2.4 per cent after the company agreed to buy cloud security company Carbonite Inc for nearly $800 million in cash.
Leading the index were Silvercorp Metals Inc., up 6.2 per cent, Interfor Corp., up 4.8 per cent, and First Majestic Silver Corp., higher by 4.5 per cent.
Lagging shares were Semafo Inc., down 16.1 per cent, Hexo Corp., down 8.1 per cent, and Premium Brands Holdings Corp., lower by 6.0 per cent.
U.S. stocks ended last week at closing highs, capping a rally that had lifted the S&P 500 more than 7 per cent since early October. MSCI’s gauge of equity performance in 47 countries closed last week barely 1 per cent off a record high.
The MSCI all-country world index shed 0.23 per cent, while the FTSEurofirst 300 index of leading regional shares closed down 0.04 per cent.
On Wall Street, the Dow Jones Industrial Average rose 12.96 points, or 0.05 per cent, to 27,694.2, the S&P 500 lost 6.04 points, or 0.20 per cent, to 3,087.04 and the Nasdaq Composite dropped 11.04 points, or 0.13 per cent, to 8,464.28.
The U.S. dollar, which often acts as a safe-haven asset when political and economic uncertainty reins, was lower against the yen and the Swiss franc, other traditional safe havens.
The dollar index fell 0.17 per cent, with the euro up 0.16 per cent to $1.1035. The yen strengthened 0.21 per cent versus the greenback at 109.02 per dollar, while the dollar was 0.42 per cent weaker against the franc, at 0.9930 per dollar.
A sell-off in southern European bond markets pushed yields higher, with the inconclusive election in Spain adding to uncertainty.
Government bond markets across the single-currency bloc have been hurt in recent weeks by optimism over a U.S.-China trade deal and improving economic data.
Gold fell to its lowest in more than three months.
U.S. gold futures settled down 0.4 per cent at $1,457.10 an ounce.
Oil prices edged lower on Monday as little progress on U.S.-China trade negotiations kept prices pressured, but bullish inventory data in the United States offered some support.
Brent crude futures lost 33 cents to settle at $62.18 a barrel, after falling to $61.57 earlier in the session. U.S. West Texas Intermediate (WTI) crude fell 38 cents to settle at $56.86 a barrel.
Investors are worried about fallout from the 16-month U.S.-China trade war, which has slowed economic growth around the world and prompted analysts to lower forecasts for oil demand, raising concerns that a supply glut could develop in 2020.
“We expect the sideward trading to continue for the time being, with the trade conflict headlines likely to dictate the direction,” Commerzbank said in a note.
Underlining the impact of the trade war, data over the weekend showed that China’s producer prices fell the most in more than three years in October.
Auto sales in China fell for a 16th consecutive month in October, data showed on Monday.
Prices pared losses on Monday after data showed that crude inventories at Cushing, the delivery point for WTI, fell about 1.2 million barrels in the week to Nov. 8, traders said, citing market intelligence firm Genscape.
“There were no real compelling stories to drive us over the weekend, and all of a sudden we have one piece of hard data that suggests that maybe oil supplies will fall this week,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
Cushing inventories have grown for five weeks in a row, according to government data, up till its latest report in the week ending Nov. 1. But analysts expected that to switch after the closure on Oct. 30 of the 590,000-bpd Keystone Pipeline, an important artery for Canadian heavy crude imports to the U.S Midwest, following an oil spill.
However, TC Energy Corp said on Sunday that the pipeline has returned to service, operating at reduced pressure with a gradual increase of volumes.
Meanwhile, investors are concerned about excess supplies of crude, analysts said.