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Trade war fears hit markets as Trump threatens China investments – business live Trade war fears hit markets as Trump threatens China investments – business live
(35 minutes later)
The US stock market is heading for losses when trading begins in almost four hours time.
The futures market suggests the Dow Jones industrial average will drop by 150 point, or 0.7%.
The technology-focused Nasdaq could lose 1%, amid concerns that tech companies are being dragged into Donald Trump’s trade dispute with China.
US futures down sharply. pic.twitter.com/YKbtcHyYcD
China’s central bank tried to calm nervous investors yesterday.
The People’s Bank of China relaxed the rules on commercial banks, allowing them to hold less cash. That should encourage them to pump more than $100bn of liquidity into the economy, to help Chinese firms.
But this wasn’t enough to prevent another day of falling share prices in Shanghai - where the market lost more than 1% today.
Chinese stocks on the brink of a bear market. pic.twitter.com/QJ160EQwpo
After two hours trading, European stock markets are falling deeper into the red.After two hours trading, European stock markets are falling deeper into the red.
The FTSE 100 has now shed almost 1%, down 70 points at 7612. Germany’s DAX has lost 1.2%, helping to knock the Europe-wide Stoxx 600 down by around 1% too.The FTSE 100 has now shed almost 1%, down 70 points at 7612. Germany’s DAX has lost 1.2%, helping to knock the Europe-wide Stoxx 600 down by around 1% too.
Ken Odeluga, market analyst at City Index, says it’s a Blue Monday in the markets.Ken Odeluga, market analyst at City Index, says it’s a Blue Monday in the markets.
The dark mood over global markets returns, on increasing pessimism that a full-blown U.S.-China trade war may be unavoidable.The dark mood over global markets returns, on increasing pessimism that a full-blown U.S.-China trade war may be unavoidable.
Technology firms are leading the selloff, following those reports that American firms will be blocked from selling some tech to China - and that Chinese firms will not be allowed to invest in US rivals.Technology firms are leading the selloff, following those reports that American firms will be blocked from selling some tech to China - and that Chinese firms will not be allowed to invest in US rivals.
In London, IT firm Micro Focus has fallen over 4%.In London, IT firm Micro Focus has fallen over 4%.
Chipmakers such as BE Semiconductor (-3.7%) and Infinion (-2.7%) are also suffering.Chipmakers such as BE Semiconductor (-3.7%) and Infinion (-2.7%) are also suffering.
Odeluga explains why the markets are worried:Odeluga explains why the markets are worried:
The latest White House trade restriction against China might be an unprecedented ban of firms, at least 25% Chinese-owned, from investing in “industrially significant” U.S. technology companies.The latest White House trade restriction against China might be an unprecedented ban of firms, at least 25% Chinese-owned, from investing in “industrially significant” U.S. technology companies.
If the Treasury proposals, outlines of which were reported by the Wall Street Journal, are enacted, Beijing would have little choice but to react in kind. That could mean potential clampdowns on U.S. technology firms active in China, from the smallest to the largest.If the Treasury proposals, outlines of which were reported by the Wall Street Journal, are enacted, Beijing would have little choice but to react in kind. That could mean potential clampdowns on U.S. technology firms active in China, from the smallest to the largest.
Newsflash: EU banks aren’t properly prepared for the risk of a hard Brexit, according to the industry’s top European watchdog.Newsflash: EU banks aren’t properly prepared for the risk of a hard Brexit, according to the industry’s top European watchdog.
In a new report, the European Banking Authority has warned that financial institutions haven’t drawn up contingency plans in case Britain leaves the EU without a deal in March 2019.In a new report, the European Banking Authority has warned that financial institutions haven’t drawn up contingency plans in case Britain leaves the EU without a deal in March 2019.
Crucially, the EBA is concerned that London and Brussels may not agree a transition deal that would allow UK-based banks to maintain their current links with Europe, and vice versa.Crucially, the EBA is concerned that London and Brussels may not agree a transition deal that would allow UK-based banks to maintain their current links with Europe, and vice versa.
The EBA also urges banks not to assume that politicians will find a magic solution to the trillions of pounds worth of cross-Channel contracts that could be left in limbo after Brexit.The EBA also urges banks not to assume that politicians will find a magic solution to the trillions of pounds worth of cross-Channel contracts that could be left in limbo after Brexit.
The EBA warns that:The EBA warns that:
a) progress in the preparations of financial institutions for the potential departure of the UK from the EU without a ratified withdrawal agreement in March 2019 is inadequate;a) progress in the preparations of financial institutions for the potential departure of the UK from the EU without a ratified withdrawal agreement in March 2019 is inadequate;
b) the recent political agreement on a transition period, while welcome, does not provide any legal certainty until a withdrawal agreement is ratified at the end of the process for the departure of the UK from the EU;b) the recent political agreement on a transition period, while welcome, does not provide any legal certainty until a withdrawal agreement is ratified at the end of the process for the departure of the UK from the EU;
c) there remains a material possibility that, despite the best efforts of both sides to conclude a ratified withdrawal agreement, this may not be possible, in which case the UK would leave the EU on 30 March 2019 by operation of law without a transition period; andc) there remains a material possibility that, despite the best efforts of both sides to conclude a ratified withdrawal agreement, this may not be possible, in which case the UK would leave the EU on 30 March 2019 by operation of law without a transition period; and
d) the necessary mitigating actions take time, and should be pursued without further delayd) the necessary mitigating actions take time, and should be pursued without further delay
Here’s the full reportHere’s the full report
Ouch: German business morale has deteriorated, as the threat of a trade war casts a shadow over Europe’s largest economy.Ouch: German business morale has deteriorated, as the threat of a trade war casts a shadow over Europe’s largest economy.
Munich’s IFO institute has reported its business climate index has dropped to 101.8 this month, down from 102.3 in May. That’s a sign that German businesses are finding life tougher this year.Munich’s IFO institute has reported its business climate index has dropped to 101.8 this month, down from 102.3 in May. That’s a sign that German businesses are finding life tougher this year.
IFO chief Clemens Fuest explained.IFO chief Clemens Fuest explained.
Companies were less satisfied with their current business situation. Their business expectations, by contrast, remained slightly optimistic.Companies were less satisfied with their current business situation. Their business expectations, by contrast, remained slightly optimistic.
The tailwind enjoyed by the German economy is calming down.The tailwind enjoyed by the German economy is calming down.
After a strong 2017, the IFO survey has been deteriorating for much of this year.After a strong 2017, the IFO survey has been deteriorating for much of this year.
Carsten Brzeski of ING points out that domestic political tensions in Germany are also hurting the economy, as Angela Merkel’s coalition threatens to split over migrationCarsten Brzeski of ING points out that domestic political tensions in Germany are also hurting the economy, as Angela Merkel’s coalition threatens to split over migration
The next two weeks could dramatically change the political landscape in Germany and in a worst case scenario even lead to a fall of the government and new elections.The next two weeks could dramatically change the political landscape in Germany and in a worst case scenario even lead to a fall of the government and new elections.
For the economy, this would mean further delays of the urgently needed investments, new structural reforms and strengthening of the monetary union.For the economy, this would mean further delays of the urgently needed investments, new structural reforms and strengthening of the monetary union.
But there’s always hope...But there’s always hope...
Six drops and one stagnation in the last seven months or in other (soccer) words: six losses and one draw. This is clearly not a promising trend. However, as seen last Saturday in the World Cup match between Germany and Sweden, never count out Germany.Six drops and one stagnation in the last seven months or in other (soccer) words: six losses and one draw. This is clearly not a promising trend. However, as seen last Saturday in the World Cup match between Germany and Sweden, never count out Germany.
Hope dies last, even if it takes until the very last second.Hope dies last, even if it takes until the very last second.
A bit like in the world cup, never count out Germany. But this #Ifo drop is not a promising trend, says ING's @Carstenbrzeskihttps://t.co/IeOVYutTCeA bit like in the world cup, never count out Germany. But this #Ifo drop is not a promising trend, says ING's @Carstenbrzeskihttps://t.co/IeOVYutTCe
Even before these latest threats, there were concerns that trade war fears are hurting the global economy.Even before these latest threats, there were concerns that trade war fears are hurting the global economy.
Yesterday the Bank of International Settlements (which represents central banks) warned that growth could falter if nations imposed more protectionist measures on each other.Yesterday the Bank of International Settlements (which represents central banks) warned that growth could falter if nations imposed more protectionist measures on each other.
BIS chief Agustín Carstens warned:BIS chief Agustín Carstens warned:
“Indeed, there are signs that the rise in uncertainty associated with the first protectionist steps and the ratcheting up of rhetoric have already been inhibiting investment.”“Indeed, there are signs that the rise in uncertainty associated with the first protectionist steps and the ratcheting up of rhetoric have already been inhibiting investment.”
The Wall Street Journal says the Trump administration is determined to protect US companies from having their tech secrets snaffled by Chinese rivals.The Wall Street Journal says the Trump administration is determined to protect US companies from having their tech secrets snaffled by Chinese rivals.
We’ve got trillions of dollars seeking our crown jewels of technology,” said White House trade adviser Peter Navarro last week. “There has to be a defense against that.”We’ve got trillions of dollars seeking our crown jewels of technology,” said White House trade adviser Peter Navarro last week. “There has to be a defense against that.”
The Financial Times says Chinese investment in America could tumble, if Trump blocks China from buying into US tech companies.The Financial Times says Chinese investment in America could tumble, if Trump blocks China from buying into US tech companies.
According to the Rhodium Group consultancy, Chinese foreign direct investment in the US plunged more than 90 per cent to just $1.8bn in the first half of 2018 compared with the same period last year.According to the Rhodium Group consultancy, Chinese foreign direct investment in the US plunged more than 90 per cent to just $1.8bn in the first half of 2018 compared with the same period last year.
In 2016, Chinese companies made a record $46bn in foreign direct investment in the US. The exact scope of the investment measures has been the subject of internal discussions in the Trump administration in recent days, say people familiar with the debate. It is unclear how quickly restrictions would take effect and if they would apply to Chinese investments in venture capital funds, which provide much of the seed money for US technology start-ups.In 2016, Chinese companies made a record $46bn in foreign direct investment in the US. The exact scope of the investment measures has been the subject of internal discussions in the Trump administration in recent days, say people familiar with the debate. It is unclear how quickly restrictions would take effect and if they would apply to Chinese investments in venture capital funds, which provide much of the seed money for US technology start-ups.
But according to officials and people briefed on the discussions, the administration has decided to restrict China’s ability to invest in or acquire US companies in the industries identified by Beijing in its so-called Made in China 2025 plan. Xi Jinping, China’s president, has set a goal of leading the world in those ten sectors, which include aerospace, AI, robotics, medical devices and railways.But according to officials and people briefed on the discussions, the administration has decided to restrict China’s ability to invest in or acquire US companies in the industries identified by Beijing in its so-called Made in China 2025 plan. Xi Jinping, China’s president, has set a goal of leading the world in those ten sectors, which include aerospace, AI, robotics, medical devices and railways.
US firms are concerned that they’ll be blocked from selling some tech products to China, says Politico:US firms are concerned that they’ll be blocked from selling some tech products to China, says Politico:
Like the tariffs that Trump imposed on $50 billion in Chinese imports — and those he has threatened to impose on $400 billion more if Beijing retaliates — the new investment restrictions and export controls are intended to pressure China to stop unfair trade practices that threaten the United States’ technological leadership. Trump is expected to invoke his emergency powers to protect national and economic security to put the restrictions in place.Like the tariffs that Trump imposed on $50 billion in Chinese imports — and those he has threatened to impose on $400 billion more if Beijing retaliates — the new investment restrictions and export controls are intended to pressure China to stop unfair trade practices that threaten the United States’ technological leadership. Trump is expected to invoke his emergency powers to protect national and economic security to put the restrictions in place.
But the administration is already getting pushback from bureaucrats who think it would be a misuse of the export control system, and from businesses that fear the approach will further disadvantage U.S. firms trying to enter the Chinese marketBut the administration is already getting pushback from bureaucrats who think it would be a misuse of the export control system, and from businesses that fear the approach will further disadvantage U.S. firms trying to enter the Chinese market
Trump’s latest threat against China has hit European markets.Trump’s latest threat against China has hit European markets.
Shares are down across the region in early trading, with Britain’s FTSE 100 and Germany’s DAX both losing 0.6%.Shares are down across the region in early trading, with Britain’s FTSE 100 and Germany’s DAX both losing 0.6%.
The threat that Chinese firms could be blocked from investing in US tech companies has worried the City, as Jasper Lawler of CMC Markets explainsThe threat that Chinese firms could be blocked from investing in US tech companies has worried the City, as Jasper Lawler of CMC Markets explains
In the latest escalation of the trade war Trump has decided to take aim at Chinese investments. A draft series of restrictions on inbound Chinese investments are due to be published later this week, in a move which could have great long-term consequences on the US – Sino economic relationship.In the latest escalation of the trade war Trump has decided to take aim at Chinese investments. A draft series of restrictions on inbound Chinese investments are due to be published later this week, in a move which could have great long-term consequences on the US – Sino economic relationship.
Once again details remain very sketchy, with the scope of such a measure still under discussion. It is now very difficult to get away from the fact that neither side has any intention of backing down in this game of economic “chicken”.Once again details remain very sketchy, with the scope of such a measure still under discussion. It is now very difficult to get away from the fact that neither side has any intention of backing down in this game of economic “chicken”.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Fears of a trade war between America and China have ratcheted up another notch, hitting confidence in the markets.Fears of a trade war between America and China have ratcheted up another notch, hitting confidence in the markets.
Overnight, it’s emerged that President Donald Trump is drawing up a fresh crackdown on Chinese investment in the US.Overnight, it’s emerged that President Donald Trump is drawing up a fresh crackdown on Chinese investment in the US.
New rules, which could be announced within days, would prevent firms with at least 25% Chinese ownership from acquiring American companies involved in ‘industrially significant technology’, such as robotics, electronic cars and aerospace.New rules, which could be announced within days, would prevent firms with at least 25% Chinese ownership from acquiring American companies involved in ‘industrially significant technology’, such as robotics, electronic cars and aerospace.
Trump is also planning to restrict US companies from selling certain technologies to China, using “enhanced export controls”, according to the Wall Street Journal.Trump is also planning to restrict US companies from selling certain technologies to China, using “enhanced export controls”, according to the Wall Street Journal.
Such a move would further damage relations between Washington and Beijing, following the threat of tit-for-tat tariffs.Such a move would further damage relations between Washington and Beijing, following the threat of tit-for-tat tariffs.
The Trump administration is embracing increasingly aggressive restrictions on what they see as China’s unfair trade practices. These latest measures could undermine China’s efforts to become a world leader in emerging technologies.The Trump administration is embracing increasingly aggressive restrictions on what they see as China’s unfair trade practices. These latest measures could undermine China’s efforts to become a world leader in emerging technologies.
As the WSJ explains:As the WSJ explains:
The twin initiatives, set to be announced by the end of the week, are designed to prevent Beijing from moving ahead with plans outlined in its “made in China 2025” report to become a global leader in 10 broad areas of technology.The twin initiatives, set to be announced by the end of the week, are designed to prevent Beijing from moving ahead with plans outlined in its “made in China 2025” report to become a global leader in 10 broad areas of technology.
The Treasury Department is crafting rules that would block firms with at least 25% Chinese ownership from buying companies involved in what the White House calls “industrially significant technology.”The Treasury Department is crafting rules that would block firms with at least 25% Chinese ownership from buying companies involved in what the White House calls “industrially significant technology.”
The ceiling may end up lower than that, according to people familiar with discussions finalizing the plans.The ceiling may end up lower than that, according to people familiar with discussions finalizing the plans.
The news has hit Asian markets, with Japan’s Nikkei and China’s Shanghai Composite indices both falling by 1%.The news has hit Asian markets, with Japan’s Nikkei and China’s Shanghai Composite indices both falling by 1%.
European stock markets are expected to follow suit, with the FTSE 100 dropping in early trading.European stock markets are expected to follow suit, with the FTSE 100 dropping in early trading.
#FTSE100 called -40pts at 7642 with oil lower after OPEC, GBP flat and metals lower on multiple trade war threats pic.twitter.com/0cPHmsh8Zx#FTSE100 called -40pts at 7642 with oil lower after OPEC, GBP flat and metals lower on multiple trade war threats pic.twitter.com/0cPHmsh8Zx
Last Friday, Trump threatened to impose new tariffs on European car makers, declaring that they should set up factories in America instead. That rocked the share prices of Fiat, BMW and Daimler.Last Friday, Trump threatened to impose new tariffs on European car makers, declaring that they should set up factories in America instead. That rocked the share prices of Fiat, BMW and Daimler.
Trump also fired a warning shot at America’s trade partners over the weekend. The president tweeted that they must drop trade barriers and tariffs - even as he slaps them on US imports - or else...Trump also fired a warning shot at America’s trade partners over the weekend. The president tweeted that they must drop trade barriers and tariffs - even as he slaps them on US imports - or else...
The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A. Trade must be fair and no longer a one way street!The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A. Trade must be fair and no longer a one way street!
No wonder investors are worried....No wonder investors are worried....
Also coming up today...Also coming up today...
We get the new IFO survey of German business morale, which may show another decline, plus the latest US home sales.We get the new IFO survey of German business morale, which may show another decline, plus the latest US home sales.
In Dublin, Ireland’s central bank and the International Monetary Fund are hosting a two-day conference on “the euro at 20”. It will examine the euro’s performance over its first two (sometimes turbulent) decades.In Dublin, Ireland’s central bank and the International Monetary Fund are hosting a two-day conference on “the euro at 20”. It will examine the euro’s performance over its first two (sometimes turbulent) decades.
IMF Christine Lagarde will give the opening speech this morning.IMF Christine Lagarde will give the opening speech this morning.
The agendaThe agenda
8.45am BST onwards: “The euro at 20” conference in Dublin8.45am BST onwards: “The euro at 20” conference in Dublin
9am BST: IFO survey of German business confidence released9am BST: IFO survey of German business confidence released
3pm BST: US new home sales3pm BST: US new home sales