Actions fade as Beijing intensifies war of words

LONDON (Reuters) – Global equity markets experienced a new wave of risk aversion on Friday after tough talk from China, as bets on a new British leader in Brexit pushed the pound to a worst week since October.

European stock markets slipped 0.6% at first, which seemed a slight drop after what had happened in Asia.

Shanghai shares ended in the reds at 2.5% and the yuan reached its lowest level in nearly five months, while President Donald Trump was increasingly trying to prevent Chinese Huawei Technologies from Buy a vital technology in the United States.

On Friday, the Communist Party Daily published an article in the press to discuss the patriotic spirit of the wars of the past, saying that the trade war would never make China fall.

As for the resolution of the trade dispute, "the next fortnight will be very, very important," said UniCredit strategist Kiran Kowshik.

"Chinese counter-tariffs are expected on June 1, and if they come into effect, I think the markets will take into account the risk that the United States will impose additional $ 300 billion in tariffs before the summit. G20 (towards the end of June). "

The fall of the yuan saw it exceed for the first time since November 2018 the bar of 6.9400 dollars for a dollar on the offshore market.

Its shift has been accentuated in recent days. Sources in China told Reuters that the central bank would intervene to ensure that it would not weaken compared to the last 7 dollars against the dollar in the short term.

Exceeding 7 could reduce some of the effects of rising US tariffs, but it could also affect confidence and trigger cash outflows, said one source.

The broadest MSCI index, composed of Asian equities outside Japan, was at its lowest level in 15 weeks and down 2.6% for the week at the end of trading.

The Nikkei of Japan was able to rebound 0.9%, while the main Australian index reached a peak in 11 years, thanks to rising commodity prices, which boosted the miners.

In Europe, it's the German DAX that has fallen the most, auto stocks have lost up to 1.6% and E-Mini futures for the S & P 500 have lost 0.35 % in front of the Wall Street exchanges.

The sentiment was briefly appeased Thursday by better news of the US economic environment, with surprisingly strong housing starts and a welcome recovery in the survey of manufacturers at the Federal Reserve in Philadelphia.

Walmart's upbeat results reduced the outlook for retail spending, although the channel also warned that pricing would raise prices for US consumers.

As the earnings season draws to a close, of the 457 companies in the S & P 500 reporting about 75% of them outperformed their earnings forecasts, according to Refinitiv data.

MAY COUNTS JUST IN JUNE

The colder trade winds helped the Treasuries, with the 10-year yield falling by 2.38% after a second good week in the bond markets.

The dollar lost some of its brilliance against the yen to end up at 109.64 on a high of 110.03. Against a basket of currencies, it slightly deteriorated to 96.824.

Yet the euro has nothing to gain and stands at $ 1.1713, down 0.5% for the week so far.

Sterling was one of the worst performances of British Prime Minister Theresa May, who fought to retain his agreement on Brexit and his post as Prime Minister, untouched by growing fears of a disordered departure from Britain. European Union.

The pound hit a three-month low of $ 1.2783 and was down 1.6% for the week so far.

The Australian dollar also came under pressure, losing 1.5% for the week to 0.6880 dollar, while investors were hearing that interest rates would be reduced in June.

Bitcoin Cyber-currency has dropped more than 20% at one time without any specific reason. It was down 7% but came back on its third week of gains and doubled in value this year.

In commodities markets, spot gold has stabilized at $ 1,287 per ounce, to the detriment of confidence in risk.

Oil futures stabilized in a fourth session as rising tensions in the Middle East fueled fears of potential supply disruptions.

US crude rose 33 cents to 63.20 dollars a barrel, while Brent crude rose 19 cents to 72.81 dollars.

The Organization of the Petroleum Exporting Countries and other producers will meet in Saudi Arabia this weekend to decide whether to continue with the supply cuts, which have pushed up prices for more than 30% since the beginning of the year.