Markets nervous amid new US-China tariffs and Trump's troubles – business live

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China retaliates as US imposes 25% taxes on another $16bn worth of imports

12.18pm BST

The dollar has rallied for the first time in six trading sessions, following the US Federal Reserve’s minutes which suggested further rate rises this year despite Donald Trump’s displeasure.

News of the new round of trade tariffs from the US and China also helped the greenback, given its status as a haven in uncertainty.

11.32am BST

The proposed merger between supermarket chains Sainsbury and Asda will be investigated by the UK’s competition and markets authority.

The CMA said it will begin a detailed assessment into how any deal would affect competition for UK shoppers, and whether it would lead to less choice or higher prices. It will also investigate whether the deal would allow the merged company to squeeze suppliers.

11.28am BST

With markets continuing to drift, Connor Campbell, financial analyst at Spreadex, said:

Thursday continued to be more notable for what didn’t happen than what did, with the FTSE avoiding the red despite a rocky set of mining stocks.

The UK index spent the morning flat at 7580, the gains from the likes of BP and Shell – Brent Crude shot up to $75 per barrel on Wednesday, though has pulled back below $74.50 this Thursday – countering the losses seen from Rio Tinto, Anglo American et al.

11.09am BST

The CBI says the hot weather in August kept people spending, but the outlook is not so positive. Anna Leach, CBI Head of Economic Intelligence, said:

The summer heatwave has kept shoppers out on the high street, with consumers splurging on food and drink for barbecues and garden parties.

That said, the outlook for retail remains challenging, with orders falling, prices rising, employment sliding, and investment drifting down.

11.08am BST

Signs of strength in the UK high street.

The latest distributive trades survey from the CBI shows a positive balance of 29 in August, compared to an expected fall to +13 from +20 in July. But the expected employment index – a quarterly index – fell to -35 in August, the lowest level since the fourth quarter of 2009 and down from a flat level in May.

10.48am BST

China’s retaliatory measures following the latest US tariff move are more aggressive than expected, says ING Bank economist Iris Pang:

The $16bn revised tariff list from China includes medical equipment and automobiles when the US administration would like to help American automobiles fare better in the international market. We see this list as more punchy than the previous one even the amount involved stays the same at $16bn…

The uncertainty now lies in how China would retaliate qualitatively and this the main concern for markets rather than today’s tariffs implementation.

10.30am BST

US markets are expected to open fairly flat, as investors remain cautious in the wake of the trade tensions and President Trump’s troubles.

Most European markets are also virtually unmoved at the moment, but analysts are nervous about how long the hiatus will last. Joshua Mahony, market analyst at IG, said:

Early hesitancy for European markets reflects the ongoing political instability in the US, alongside uncertainty as the US-China trade talks come to a head … The ongoing fears over the snowballing political picture in the US … remain a driver of risk aversion in the US, with European markets largely outperforming in recent days. Comments from Trump that he did not break election campaign rules are far from allaying market fears, and there is a growing fear that this crisis could drive substantial losses at the mid-term elections in November ….

Today sees the US-China trade talks come to a head, with low market expectations likely to drive the response to any final announcement. There seems to be little headway being make over the months, and the inability of the Chinese to appease Trump’s demands mean that this is likely to rumble on for some time yet. However, with the bar set so low, there is also the potential for some sort of half-hearted announcement which sets out an agreement to work towards specific targets, in a similar ilk to that seen with the EU.

10.17am BST

The trade tensions between the US and China are more likely to deteriorate this year and dampen global growth in 2019, according to Moody’s.

In its latest global outlook report, Moody’s says there are early signs that global growth has peaked. It expects the G20 countries to grow by 3.3% in 2018 and 3.1% in 2019. The advanced economies will grow 2.3% in 2018 and 2.0% in 2019, while G20 emerging markets will remain the growth drivers, at 5.1% in both 2018 and 2019.

Most of the impact of the trade restrictions on economic growth will be felt in 2019. The magnitude of the macro impacts will depend on market sentiment. Tightening of financial conditions through asset price and currency adjustment and a broader hit to business and consumer confidence are now more likely than a few months ago and have the potential to derail the global economy.

9.30am BST

Back with the trade wars, and here is our latest report on the new tariffs:

The US and China have escalated their ongoing trade war by implementing 25% tariffs on $16bn worth of imports on both sides, bringing the amount levied to a combined $100bn (£78bn) since July.

Beijing began implementing the new tariffs on Thursday, when the US said it would begin collecting extra duties in retaliation for what it claimed were unfair Chinese trade practices.

Related: US and China escalate trade war as total sum levied reaches $100bn

9.27am BST

Euro area flash PMIs: output and new orders outside France & Germany weakened to 22-month lows, with future expectations hitting a five-year low. Details much less positive than headlines overall.

9.22am BST

The eurozone data will not make easy reading for the European Central Bank or its president, Mario Draghi, suggests Balraj Sroya, sales trader at foreign exchange specialist Foenix Partners:

The ECB’s monetary policy plans could be derailed as trade war fears have impacted PMI figures from the bloc state. While both the services and manufacturing PMI prints from the eurozone showed expansion in each respective sector, the manufacturing figure fell to 20-month lows of 54.6. Recently Inflation and economic growth have exceeded the ECB’s targets. However, the central bank’s Quantitative Easing tapering strategy could be derailed if feeble data such as today’s PMI prints continue while adding fuel to an already cautious Draghi.

9.12am BST

Eurozone business growth picked up but at a slower pace than expected, with the prospects of a trade war hitting the outlook for manufacturers.

The IHS Markit preliminary composite PMI – which includes both the manufacturing and service sectors – came in at 54.4 in August, up from 54.3 the previous month but marginally below the forecast 54.5. The rate of expansion was one of the weakest seen over the past year and a half, said Markit.

The survey data indicate that the eurozone economy looks to have continued to grow at a steady rate in August, raising hopes that the third quarter could see GDP growth match the 0.4% expansion seen in the second quarter. In fact, the survey evidence suggests that the official data so far this year could yet be revised slightly higher.

Jobs growth also remains encouragingly robust, which should help further stimulate consumer spending and help offset signs of continuing weakness in exports.

8.46am BST

Back with the German PMIs:

Flash #Germany PMI 55.7 v 55.0 in July (best since Feb). PMI so far indicates Q3 GDP of c.+0.5%. Employment growth close to record highs. Services-led expansion, but new orders growth for goods slipped to the lowest since May 2016 amid smallest rise in exports for over 2 years

8.40am BST

Investors remain cautious, with markets continuing to drift. Lee Wild, head of equity strategy at interactive investor, said:

Markets traded either side of breakeven in early trade as tariffs threatened by both the US and China came into effect overnight. And there’s a real risk to global economic growth if the US slaps duties on another $200bn of Chinese goods, and especially if other countries get sucked into this dispute. At a time when other economies are beginning to struggle, a sharp slowdown in US expansion could have a significant impact worldwide.

These developments come at a particularly sensitive time for a UK stock market rangebound for the past three months. September is statistically the worst month of the year for UK shares, but there have been wild swings either way in recent years, so don’t expect this stale period to last.

8.37am BST

Germany’s business activity hit a six month high, with a strong service sector making up for weakness manufacturing as global trade tensions rise.

The IHS Markit preliminary composite PMI rose from 55 in July to 55.7, better than the expected 55.2.

German business continued to display remarkable resilience during August, with the latest PMI data going some way to dispel any fears about a global trade slowdown and its impact on the health of the economy.

Buoyed by strong fundamentals in the domestic market, including rising employment and wages, the service sector enjoyed an upturn in growth in August and drove the steepest rise in private sector business activity for six months.

8.27am BST

#France Markit Services PMI Flash at 55.7

#France Markit Manufacturing PMI Flash at 53.7

8.24am BST

France has reported better than expected growth in August, according to a preliminary survey of the country’s manufacturing and service sectors.

IHS Markit’s composite purchasing managers index – which combines the two sectors – rose from 54.4 in July to 55.1 this month. Analysts had been expecting a figure of around 54.6. The index has been above the 50 level which separates growth from contraction for the 26th month in a row.

Output growth across the French private sector ticked up to a four-month high in August, with both the service and manufacturing sectors seeing stronger expansions. Robust domestic client demand, alongside a renewed upturn in exports provided stimulus for the latest acceleration in growth.

A key theme in the latest survey were the sharp inflationary pressures reported in the manufacturing sector, with many respondents blaming higher oil- related input cost burdens. This in turn placed downward pressure on confidence towards expected output growth over the next year. That said, despite optimism slipping in August, French businesses continued to hire additional staff at an elevated pace, partly reflecting rising output requirements.

8.17am BST

The new round of tit-for-tat trade tariffs between the US and China, the prospect of a US rate rise next month and Donald Trump’s growing problems have cast a shadow over European markets at the open.

The FTSE 100 is virtually flat, up just 0.05%, while Germany’s Dax is down 0.07% and France’s Cac has climbed 0.11%.

7.42am BST

Here are the opening calls for the European markets:

European Opening Calls:#FTSE 7562 -0.16%#DAX 12365 -0.17%#CAC 5418 -0.05%#MIB 20679 -0.10%#IBEX 9566 -0.15%

Weaker tone across European stock indices as fresh round of US-China tariffs kick in. #Trump issues continue to weigh #FTSE called 20 lower

7.40am BST

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

The bull run in the US market may have broken a new record on Wednesday, but investors have plenty to be nervous about at the moment.

The US-China trade spat continues as representatives from both countries engage in low level talks in the US. The tit-for-tat tariffs conflict continues as both sides will impose tariffs on $16bn worth of each other’s goods today. The monetary size is small but the gesture is big, and traders will be eyeing developments.

There has been a lot of negative news on Trump over the past 36 hours; the job of markets will now be to decide whether Trump can ride the storm, or whether the double blow is likely to damage the Republican Party’s election prospects at the mid terms in November and result in the extension of a criminal investigation, which is already overshadowing Trump’s presidency. The reality is that the market’s reaction so far has been limited and contained, suggesting that traders believe, at least for now, that Trump can move past this.

The flash manufacturing and services PMI reports from major eurozone countries will be in focus today. At 08.15 (UK time) France will release their numbers, and economists are expecting the manufacturing report to come in at 53.4, a slight improvement on July’s 53.3. The consensus estimate for the services report is 55.1, up from 54.9 last month. Germany will announce their figures at 08.30 (UK time) and traders are expecting a slight cooling in the manufacturing sector from 56.9 in July to 56.5. Economists are expecting the services report to be 54.3, and the July reading was 54.1.

The composite PMI is likely to edge up slightly in August, to 54.5 from 54.3 in the previous month (10:00 CET). We expect both the manufacturing and the services components to contribute to the headline reading. While a pickup in global trade activity during the second half of 2018, as indicated by our own global leading indicator, is likely to bolster sentiment of eurozone export-dependent manufacturers going forward, solid domestic fundamentals stemming from robust consumer spending and record-low unemployment should keep economic activity in the services sector well supported.

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Source: china
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