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| IMF's Lagarde urges US and China to resolve trade war - business live | IMF's Lagarde urges US and China to resolve trade war - business live |
| (about 1 hour later) | |
| The selloff is gathering pace, as anxiety over the US-China trade dispute bubbles away. | |
| Britain’s FTSE 100 is now down 70 points, or nearly 1%, at 7,320, as London traders play catch-up after yesterday’s holiday. This could be its worst day in over a month. | |
| Industrial group Melrose (-3.6%) is now the biggest faller, with fellow exporter Burberry (-2.75%) and packaging firm Mondi (-3.1%) joining Asia-focused banks among the top fallers. | |
| The FSE 250, which contains smaller UK-focused companies, has shed 0.8% | |
| The French CAC and German DAX are now both down around 0.5%, adding to Monday’s losses. | |
| The news that China’s top negotiator Liu He is still heading to Washington later this week hasn’t provided much cheer to invesors. | |
| Fiona Cincotta, analyst at City Index, says the looming thread of fresh tariffs is worrying the City. | |
| After the last set of US-China trade negotiations in Beijing, comments from both sides were muted about progress but on Monday the US threatened to increase trade tariffs of Chinese again because the Chinese side seems to be backtracking on some of the agreements made during the talks. The increase from 10% to 20% would affect $200 billion worth of goods and could kick in as soon as this Friday unless the Chinese delegation arriving in Washington on Thursday manages to appease the US negotiators. | |
| The US-China one-step-forward-two-step-back hurt US markets late Monday and extended into Asian and European trading. The DAX initially held up helped by data showing that German manufacturing orders picked up in March but it eventually crumbled because German exporters are highly sensitive to the stability of the Chinese market, one of their top export destinations. | |
| Back in the UK, car sales have fallen again as private buyers shun the market. | Back in the UK, car sales have fallen again as private buyers shun the market. |
| The SMMT, which represents care manufacturers and salespeople, reports that new registrations shrunk by 4.1% in April to 161,064 cars -- the second worst reading for any April since 2012. | The SMMT, which represents care manufacturers and salespeople, reports that new registrations shrunk by 4.1% in April to 161,064 cars -- the second worst reading for any April since 2012. |
| Registrations by private motorists fell by 10.3%, a steep decline suggesting consumers are being cautious (or cash-strapped). Fleet sales ( to companies) rose by 2.9%. | Registrations by private motorists fell by 10.3%, a steep decline suggesting consumers are being cautious (or cash-strapped). Fleet sales ( to companies) rose by 2.9%. |
| The UK new car market declined by -4.1% in April. The month saw 161,064 units registered, the second lowest April volume since 2012 but following a double-digit increase the previous year. https://t.co/k9j9L5Iiid pic.twitter.com/TCvxorosFx | The UK new car market declined by -4.1% in April. The month saw 161,064 units registered, the second lowest April volume since 2012 but following a double-digit increase the previous year. https://t.co/k9j9L5Iiid pic.twitter.com/TCvxorosFx |
| Christine Lagarde also warned that Donald Trump’s threat to hike Chinese tariffs are an ‘unfavourable’ development, just when the trade war appeared to be cooling. | Christine Lagarde also warned that Donald Trump’s threat to hike Chinese tariffs are an ‘unfavourable’ development, just when the trade war appeared to be cooling. |
| The IMF chief says: | The IMF chief says: |
| We thought this threat was waning and relations were improving and we were moving toward an agreement. | We thought this threat was waning and relations were improving and we were moving toward an agreement. |
| We hope that is still the case but today rumors, tweets and comments are not very favourable.” | We hope that is still the case but today rumors, tweets and comments are not very favourable.” |
| The head of the International Monetary Fund has just weighed in, urging Beijing and Washington to cool their trade war. | The head of the International Monetary Fund has just weighed in, urging Beijing and Washington to cool their trade war. |
| Speaking at a finance conference in Paris, Christine Lagarde told reporters that the world economy would suffer from further escalation. | Speaking at a finance conference in Paris, Christine Lagarde told reporters that the world economy would suffer from further escalation. |
| She warned: | She warned: |
| “For us at the IMF, it’s imperative that trade tensions are resolved in a way satisfying for everyone because clearly tensions between the United States and China are the threat to the global economy,”. | “For us at the IMF, it’s imperative that trade tensions are resolved in a way satisfying for everyone because clearly tensions between the United States and China are the threat to the global economy,”. |
| Lagarde also gave a speech on sustainable development, in which she challenged private lenders to focus more on long-term value, and less on short-term profits (good luck with that!) | Lagarde also gave a speech on sustainable development, in which she challenged private lenders to focus more on long-term value, and less on short-term profits (good luck with that!) |
| Attaining the #SDGs is imperative but low-income countries need to spend about US$0.5 trillion in 2030How can this be financed sustainably? Raising revenue, improving spending efficiency, reducing corruption & int’l community support @Lagarde #ParisForum https://t.co/T1TLmwpwF3 pic.twitter.com/1Dhy5ZEoJe | Attaining the #SDGs is imperative but low-income countries need to spend about US$0.5 trillion in 2030How can this be financed sustainably? Raising revenue, improving spending efficiency, reducing corruption & int’l community support @Lagarde #ParisForum https://t.co/T1TLmwpwF3 pic.twitter.com/1Dhy5ZEoJe |
| France’s finance minister, Bruno Le Maire, also called on both parties to calm down. | France’s finance minister, Bruno Le Maire, also called on both parties to calm down. |
| Speaking hours after America’s Robert Lighthizer accused China of eroding its commitments, Le Maire warned: | Speaking hours after America’s Robert Lighthizer accused China of eroding its commitments, Le Maire warned: |
| “We want the negotiations to stick to the principals of transparency and multilateralism. | “We want the negotiations to stick to the principals of transparency and multilateralism. |
| “I really urge everybody to avoid decisions that would threaten and jeopardise world growth in the coming months.” | “I really urge everybody to avoid decisions that would threaten and jeopardise world growth in the coming months.” |
| America’s chemicals industry has warned that hiking the tariffs on Chinese chemicals from 10% to 25% would hurt the US economy. | America’s chemicals industry has warned that hiking the tariffs on Chinese chemicals from 10% to 25% would hurt the US economy. |
| Cal Dooley, president of the American Chemistry Council (ACC), says: | Cal Dooley, president of the American Chemistry Council (ACC), says: |
| China supplies the United States with several chemicals which are not available anywhere else and which are critical inputs to U.S. manufacturing. China is also the third-largest export market for U.S. chemicals manufacturers. Future growth for our industry depends on a strong trading relationship with China and a trade policy that creates certainty and predictability for investors – not a looming threat of more or higher tariffs. | China supplies the United States with several chemicals which are not available anywhere else and which are critical inputs to U.S. manufacturing. China is also the third-largest export market for U.S. chemicals manufacturers. Future growth for our industry depends on a strong trading relationship with China and a trade policy that creates certainty and predictability for investors – not a looming threat of more or higher tariffs. |
| “We are starting to see signs that the tariffs are disrupting supply chains, cutting off markets, and eroding U.S. chemical manufacturing competitiveness. Although chemical imports from China grew by 22.7 percent in 2018, the retaliatory tariffs significantly dampened U.S. chemical exports to China, resulting in only a 2.7 percent increase in 2018 – nearly tripling the chemicals trade deficit, from $1.4 billion to $4.0 billion. | “We are starting to see signs that the tariffs are disrupting supply chains, cutting off markets, and eroding U.S. chemical manufacturing competitiveness. Although chemical imports from China grew by 22.7 percent in 2018, the retaliatory tariffs significantly dampened U.S. chemical exports to China, resulting in only a 2.7 percent increase in 2018 – nearly tripling the chemicals trade deficit, from $1.4 billion to $4.0 billion. |
| Just in: The Chinese government has warned Washington that simply imposing more tariffs won’t fix their trade dispute. Reuters has the details: | Just in: The Chinese government has warned Washington that simply imposing more tariffs won’t fix their trade dispute. Reuters has the details: |
| Tariffs won’t resolve any problems in the ongoing bilateral trade dispute between China and the United States, China’s foreign ministry said on Tuesday. | Tariffs won’t resolve any problems in the ongoing bilateral trade dispute between China and the United States, China’s foreign ministry said on Tuesday. |
| Foreign ministry spokesman Geng Shuang, speaking at a daily press briefing, said China hopes that the United States will work with China to resolve each other’s concerns. | Foreign ministry spokesman Geng Shuang, speaking at a daily press briefing, said China hopes that the United States will work with China to resolve each other’s concerns. |
| Nickel has hit a three-month low this morning, on concerns that trade tensions will hit demand for commodities. | Nickel has hit a three-month low this morning, on concerns that trade tensions will hit demand for commodities. |
| Nickel contracts at the London Metal Exchange fell 0.8% to $12,080 per tonne, the lowest since late January. | Nickel contracts at the London Metal Exchange fell 0.8% to $12,080 per tonne, the lowest since late January. |
| Deutsche Bank analysts reckon Beijing is unlikely to back down, despite Trump’s threat to impose steeper tariffs on their sales to America. | Deutsche Bank analysts reckon Beijing is unlikely to back down, despite Trump’s threat to impose steeper tariffs on their sales to America. |
| They points out that: | They points out that: |
| Jesse Cohen of Investing.com sums up the trade war cycle: | Jesse Cohen of Investing.com sums up the trade war cycle: |
| China says Vice Premier Liu He to visit U.S. from May 9 to May 10 for trade talks$SPY $SPX $ES_F pic.twitter.com/fWbQrnzVzl | China says Vice Premier Liu He to visit U.S. from May 9 to May 10 for trade talks$SPY $SPX $ES_F pic.twitter.com/fWbQrnzVzl |
| Chinese stocks stabilized on Tue after a massive sell-off on Mon. Indexes were lifted by news that Chinese vice premier Liu He will visit the US for trade talks this week. #Shanghai Composite closed 0.7% higher at 2926, after falling below 2900 mark intraday. pic.twitter.com/UmvlRPwY9q | Chinese stocks stabilized on Tue after a massive sell-off on Mon. Indexes were lifted by news that Chinese vice premier Liu He will visit the US for trade talks this week. #Shanghai Composite closed 0.7% higher at 2926, after falling below 2900 mark intraday. pic.twitter.com/UmvlRPwY9q |
| The Chinese yuan is strengthening a little, on relief that vice-premier Liu He is still packing his bags for a trip to Washington this week. | The Chinese yuan is strengthening a little, on relief that vice-premier Liu He is still packing his bags for a trip to Washington this week. |
| After slumping to a three-month low of 6.8 yuan to the US dollar on Monday, the currency has recovered to 6.76 today. | After slumping to a three-month low of 6.8 yuan to the US dollar on Monday, the currency has recovered to 6.76 today. |
| But professor Christopher Balding, a China expert, isn’t sure that Liu’s trip is an encouraging sign for Beijing. | But professor Christopher Balding, a China expert, isn’t sure that Liu’s trip is an encouraging sign for Beijing. |
| Please tell me under what circumstances China sending Liu to Washington is a sign of strength after the Trump Tweets. This is China either admitting they screwed up or that they are desperate for a deal. https://t.co/ygNRH1Y3LX | Please tell me under what circumstances China sending Liu to Washington is a sign of strength after the Trump Tweets. This is China either admitting they screwed up or that they are desperate for a deal. https://t.co/ygNRH1Y3LX |
| European stock markets are trying to revive themselves after Monday’s sell-off, but it’s slow going. | European stock markets are trying to revive themselves after Monday’s sell-off, but it’s slow going. |
| The Italian FTSE MIB has jumped 0.5%, Spain’s IBEX is up 0.3%, but Germany’s DAX is only 0.1% higher. | The Italian FTSE MIB has jumped 0.5%, Spain’s IBEX is up 0.3%, but Germany’s DAX is only 0.1% higher. |
| Investors are trying to decide whether the trade talks are really on the rocks, as Neil Wilson of Markets.com explains: | Investors are trying to decide whether the trade talks are really on the rocks, as Neil Wilson of Markets.com explains: |
| There is a sense that the US is working extremely hard to extract last-minute concessions from China ahead of a planned visit by vice-premier Liu He. That visit has been confirmed – he is to visit the US May 9th-10th. | There is a sense that the US is working extremely hard to extract last-minute concessions from China ahead of a planned visit by vice-premier Liu He. That visit has been confirmed – he is to visit the US May 9th-10th. |
| Will that be enough to avert the tariffs being raised on Friday is unclear, but at least it means the two sides are continuing to talk and a deal is still possible. However, we don’t know if this is a last-ditch rescue mission to save talks or something that moves talks on in a more substantive way. | Will that be enough to avert the tariffs being raised on Friday is unclear, but at least it means the two sides are continuing to talk and a deal is still possible. However, we don’t know if this is a last-ditch rescue mission to save talks or something that moves talks on in a more substantive way. |
| The optics suggest the former, but one cannot but sense that Mr Trump is playing us a little. He may well be making a deal seem further away in order to make the achievement seem all the more impressive when it comes. | The optics suggest the former, but one cannot but sense that Mr Trump is playing us a little. He may well be making a deal seem further away in order to make the achievement seem all the more impressive when it comes. |
| Britain’s FTSE 100 has shed 0.3%, or 24 points, at the start of trading. | Britain’s FTSE 100 has shed 0.3%, or 24 points, at the start of trading. |
| After yesterday’s Bank Holiday, City traders are catching up with the latest trade war action. | After yesterday’s Bank Holiday, City traders are catching up with the latest trade war action. |
| Financial stocks Standard Chartered Bank (-2.5%) and HSBC Holdings (-2.3%) are the top fallers. They’re both heavily exposed to the Asian economy, so would be hurt by a deeper trade war. | Financial stocks Standard Chartered Bank (-2.5%) and HSBC Holdings (-2.3%) are the top fallers. They’re both heavily exposed to the Asian economy, so would be hurt by a deeper trade war. |
| China’s stock market is staging a late mini-rally, on relief that trade talks will resume in Washington on Thursday. | China’s stock market is staging a late mini-rally, on relief that trade talks will resume in Washington on Thursday. |
| The CSI 300 index has jumped 1% today, clawing back some of its worst losses since February 2016 yesterday (when it lost 6%). | The CSI 300 index has jumped 1% today, clawing back some of its worst losses since February 2016 yesterday (when it lost 6%). |
| Newsflash: Beijing has announced that vice-president Liu He is planning to visit Washington later this week for trade talks. | Newsflash: Beijing has announced that vice-president Liu He is planning to visit Washington later this week for trade talks. |
| China’s commerce ministry says Liu will hold trade negotiations on May 9th and 10th (Thursday and Friday). | China’s commerce ministry says Liu will hold trade negotiations on May 9th and 10th (Thursday and Friday). |
| That feels like an encouraging sign -- relations between the two sides haven’t broken down completely, despite Trump and Lighthizer’s criticism. | That feels like an encouraging sign -- relations between the two sides haven’t broken down completely, despite Trump and Lighthizer’s criticism. |
| NEW: Chinese Vice Premier Liu He will visit the U.S. for trade talks May 9-10, China's MOFCOM says. The decision to send him comes after USTR Lighthizer and Treasury Sec. Mnuchin yesterday faulted Beijing's negotiating tactics and said plans to raise tariffs on Friday are firm. | NEW: Chinese Vice Premier Liu He will visit the U.S. for trade talks May 9-10, China's MOFCOM says. The decision to send him comes after USTR Lighthizer and Treasury Sec. Mnuchin yesterday faulted Beijing's negotiating tactics and said plans to raise tariffs on Friday are firm. |
| That VP Liu will visit the US for trade talks this week is a faintly moderately positive sign for US-China trade talks—tho his not attending would also have nixed any deal hopes. But risk of hardening of China’s position remains, esp if US tariff threat materialises. #tradewar | That VP Liu will visit the US for trade talks this week is a faintly moderately positive sign for US-China trade talks—tho his not attending would also have nixed any deal hopes. But risk of hardening of China’s position remains, esp if US tariff threat materialises. #tradewar |
| 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. |
| Trade war fears are gripping the markets today, as relations between the US and China take a worrying turn south. | Trade war fears are gripping the markets today, as relations between the US and China take a worrying turn south. |
| Donald Trump’s threat on Sunday night to hike tariffs on $200bn of Chinese imports to 25% has shaken market complacency that a trade deal was close. | Donald Trump’s threat on Sunday night to hike tariffs on $200bn of Chinese imports to 25% has shaken market complacency that a trade deal was close. |
| The US president accused China of moving too slowly, and also floated the prospect of dumping new tariffs on all imports - a serious threat. | The US president accused China of moving too slowly, and also floated the prospect of dumping new tariffs on all imports - a serious threat. |
| Trump escalates trade war with China with plan to raise tariffs | Trump escalates trade war with China with plan to raise tariffs |
| Trump’s top trade official, Robert Lighthizer, has also weighed in, accusing Beijing of reneging on promises. | Trump’s top trade official, Robert Lighthizer, has also weighed in, accusing Beijing of reneging on promises. |
| He told reporters: | He told reporters: |
| “Over the course of the last week or so we have seen an erosion in commitments by China. That in our view is unacceptable.” | “Over the course of the last week or so we have seen an erosion in commitments by China. That in our view is unacceptable.” |
| Those comments confirm that Trump’s threat wasn’t just a twitter tantrum - Washington really is prepared to escalate the trade war. Hiking the levy on thousands of Chinese industrial goods, food stuffs, chemicals and consumer products from 10% to 25% would have a serious impact on trade. | Those comments confirm that Trump’s threat wasn’t just a twitter tantrum - Washington really is prepared to escalate the trade war. Hiking the levy on thousands of Chinese industrial goods, food stuffs, chemicals and consumer products from 10% to 25% would have a serious impact on trade. |
| Those two tweets from President Donald Trump that rocked markets on Monday weren’t just bluster: The top U.S. trade negotiator confirmed the U.S. plans to hike tariffs on Chinese goods this week, accusing China of backpedaling on commitments made during the talks. | Those two tweets from President Donald Trump that rocked markets on Monday weren’t just bluster: The top U.S. trade negotiator confirmed the U.S. plans to hike tariffs on Chinese goods this week, accusing China of backpedaling on commitments made during the talks. |
| China’s stock market slumped 6% on Monday, its biggest fall in several years, and has been volatile today. | China’s stock market slumped 6% on Monday, its biggest fall in several years, and has been volatile today. |
| Japan’s Nikkei has shed 1.5%, as trading resumed after a 10-day holiday. | Japan’s Nikkei has shed 1.5%, as trading resumed after a 10-day holiday. |
| European stocks fell sharply yesterday, as investors feared that months of talks between the two sides are on the brink of breaking down. Wall Street also suffered an early tumble, before a late revival as hopes grew that a deal is still possible. | European stocks fell sharply yesterday, as investors feared that months of talks between the two sides are on the brink of breaking down. Wall Street also suffered an early tumble, before a late revival as hopes grew that a deal is still possible. |
| London’s FTSE 100 missed the action yesterday; a bank holiday meant investors were free to hit the shops, shiver around the barbecue or botch some DIY. | London’s FTSE 100 missed the action yesterday; a bank holiday meant investors were free to hit the shops, shiver around the barbecue or botch some DIY. |
| Markets slide after Trump threatens to dramatically increase China tariffs | Markets slide after Trump threatens to dramatically increase China tariffs |
| The optimistic view is that America is ratcheting up the pressure, to force late concessions out of China on issues such as intellectual property rights and forced technology transfers. | The optimistic view is that America is ratcheting up the pressure, to force late concessions out of China on issues such as intellectual property rights and forced technology transfers. |
| The less rosy take, though, is that the two sides still far from reaching a consensus, so there’s little chance of tariffs being lifted soon. | The less rosy take, though, is that the two sides still far from reaching a consensus, so there’s little chance of tariffs being lifted soon. |
| Analysts at ING predict a long haul, telling clients: | Analysts at ING predict a long haul, telling clients: |
| We have long believed that the trade war is more than about trade, it is about technology. And during the last couple of months, the US has urged its Western allies not to use China’s 5G products as the US believes that there is a security concern. | We have long believed that the trade war is more than about trade, it is about technology. And during the last couple of months, the US has urged its Western allies not to use China’s 5G products as the US believes that there is a security concern. |
| The development of the trade negotiation process should be long as China learns about the US negotiation tactics, and has a back-up from a policy-stimulated economy. Technology should be the focus of the renegotiations. | The development of the trade negotiation process should be long as China learns about the US negotiation tactics, and has a back-up from a policy-stimulated economy. Technology should be the focus of the renegotiations. |
| Also coming up today | Also coming up today |
| New car sales figures will show how consumers are behaving since the Brexit deadline was extended. | New car sales figures will show how consumers are behaving since the Brexit deadline was extended. |
| The European commission will release its spring economic forecast, a seasonal outlook of the European economy. Could it spy some green shoots? | The European commission will release its spring economic forecast, a seasonal outlook of the European economy. Could it spy some green shoots? |
| Plus, two Bank of England policymakers are giving speeches today. Deputy governor Jon Cunliffe and chief economist Andy Haldane are both in the running to replace governor Mark Carney, so they’ll want to make a good impression. | Plus, two Bank of England policymakers are giving speeches today. Deputy governor Jon Cunliffe and chief economist Andy Haldane are both in the running to replace governor Mark Carney, so they’ll want to make a good impression. |
| The agenda | The agenda |
| 9am BST: UK car registrations for April | 9am BST: UK car registrations for April |
| 10am BST: European commission releases new economic forecasts | 10am BST: European commission releases new economic forecasts |
| 10.20am BST: BoE deputy governor Jon Cunliffe speaks at CFO Agenda 2019 | 10.20am BST: BoE deputy governor Jon Cunliffe speaks at CFO Agenda 2019 |
| 5.20pm BST: BoE chief economist Andy Haldane gives the Sheffield Political Economy Research Institute Annual Lecture 2019 | 5.20pm BST: BoE chief economist Andy Haldane gives the Sheffield Political Economy Research Institute Annual Lecture 2019 |