Global shares mixed as US-China trade tensions cloud outlook

European shares were mostly higher on Wednesday after benchmarks mostly fell in Asia ahead of talks between the U.S. and China aimed at resolving the trade war between the world’s two biggest economies. Adding to jitters over the economic outlook, the new head of the 189-nation International Monetary Fund warned the world economy is in the grips of a “synchronized global slowdown” that will yield slower growth for 90% of the world this year.

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Markets mixed amidst IMF warning, trade war

IMF Managing Director Kristalina Georgieva said that an updated IMF forecast to be released next week will show growth falling to its lowest point since the beginning of this decade. But European markets bounced back, with Germany’s DAX climbing 0.6% to 12,041.90. The CAC 40 in Paris picked up 0.4% to 5,479.90, while in London, the FTSE 100 edged 0.1% higher to 7,150.31. Futures also pointed to a rebound on Wall Street, with the contract for the Dow Jones Industrial Average up 0.3% at 26,228.00. That for the S&P 500 climbed 0.4% to 2,904.30.

Asian trading was overshadowed by losses overnight in New York after the U.S. blacklisted a group of Chinese companies, claiming that their technology plays a role in the repression of China’s Muslim minority groups. The move added to tensions ahead of the trade talks, which are due to resume on Thursday in Washington. 

Japan’s Nikkei 225 index lost 0.6% to 21,456.38 and the Hang Seng in Hong Kong dropped 0.8% to 25,682.81. Australia’s S&P  ASX 200 shed 0.7% to 6,546.70. The Shanghai Composite index reversed early losses, gaining 0.4% to 2,924.86. The Sensex in India picked up 1.1% to 37,937.40, while shares in Taiwan and Southeast Asia declined. South Korean and Malaysian markets were closed for holidays.

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China: US tactics risky

China demanded Washington lift the sanctions on Chinese tech companies and warned Wednesday it will “resolutely safeguard” the country’s interests. The Ministry of Commerce criticized the curbs imposed on sales of U.S. technology to a group of Chinese companies as interference in the country’s affairs. “The US tactics are undoubtedly a high risk, seeking to pressure the Chinese trade delegation before the main event really gets underway,” Jeffrey Halley of Oanda said in a commentary.

In New York, the S&P 500 index lost 1.6% to 2,893.06. The Dow slid 1.2% to 26,164.04 and the Nasdaq, which is heavily weighted with technology companies, dropped 1.7%, to 7,823.78. Smaller company stocks were also big decliners, sending the Russell 2000 index down 1.7%, to 1,472.60.

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