World shares mixed as China, Italy vote, tariffs in focus

In Photo: A man stands next to an electronic board showing Hong Kong share index outside a local bank in Hong Kong on March 5.

HONG KONG—World shares were mixed on Monday as investors evaluated China’s annual economic growth forecast and pledges for further reforms. Italian shares slumped after uncertain election results paved the way for political deadlock.

France’s CAC 40 was up 0.4 percent at 5,159.70, Germany’s DAX rose 0.3 percent to 11,954.18 and Britain’s FTSE 100 gained 0.4 percent to 7,099.34. But Italy’s benchmark FTSE MIB sank 1.3 percent to 21,630.86. Wall Street was poised to open lower. Dow futures lost 0.2 percent to 24,487.00 and broader S&P 500 futures fell 0.2 percent to 2,683.70.

Japan’s benchmark Nikkei 225 index lost 0.7 percent to close at 21,042.09 and South Korea’s Kospi slipped 1.1 percent to end at 2,375.06. Hong Kong’s Hang Seng tumbled 2.3 percent to 29,886.39 but the Shanghai Composite in mainland China recouped losses, rising in the final minutes of trading to edge 0.1 percent higher to 3,256.93. Australia’s S&P/ASX 200 fell 0.6 percent to 5,895.00. Benchmarks in Taiwan and Southeast Asia also lost ground.

Beijing set an annual growth target for the world’s No. 2 economy of “around 6.5 percent” for 2018. Premier Li Keqiang announced that at the opening of the annual legislative session. That’s down from a 6.9-percent expansion last year, but still robust. Li also outlined plans to forge ahead with an overhaul of state industry, ramp up military spending and pursue advanced technology.

A survey showed that activity in China’s services industry cooled slightly last month but remained solidly in expansion mode. Caixin’s general services purchasing managers’ index dipped to 54.2 in February from 54.7 the previous month, on a 100-point scale on which numbers above 50 signify expansion.

US President Donald J. Trump fanned fears of a trade war after announcing his intent last week to slap tariffs on metal imports. “Steel and Aluminum industries are dead. Sorry, it’s time for a change!” he tweeted last Sunday, after saying he wanted duties of 25 percent and 10 percent, respectively. White House officials said protectionist policy measures will be made official in the next two weeks.

“Concerns about a global trade war continue to weigh on investor sentiment,” said Hussain Sayed, chief market strategist at FXTM. “This trade fight will be messy and cause more volatility in equities, fixed income and currency markets in the short run.”

Projections showed no single party or bloc emerged from Sunday’s election with enough support to win a majority in Parliament, setting the stage for extended political uncertainty. The forecasts showed a center-right coalition that includes an anti-migrant party taking a slight lead over the populist 5-Star Movement. Neither was close to the threshold needed to form a government. Rival anti-Europe parties garnered more than half the vote, a result that’s likely to unsettle the European Union and possibly financial markets.

The dollar fell to a fresh 17-month low, weakening to ¥105.51 from ¥105.74 late Friday. The euro strengthened to $1.2330 from $1.2320. Oil futures extended gains. Benchmark US crude rose 57 cents to $61.82 a barrel in electronic trading on the New York Mercantile Exchange in New York. The contract rose 26 cents to settle at $61.25 per barrel last Friday. Brent crude, the international standard, rose 47 cents to $64.84 a barrel.

Image Credits: AP

Turning Points 2018
Suntrust banner2