Global stocks skid on tariffs, Argentina hit by capital controls By Reuters

By Ritvik Carvalho

LONDON (Reuters) – World markets remained under control on Monday after the United States and China imposed new tariffs, while capital controls emerged from the spotlight.

International dollar money bonds fell to unprecedented lows, financial stocks fell and risk premiums soared after President Mauricio Macri restored control of capital as the country struggled to avoid its ninth sovereign default.

Macri's U-turn, which had already raised many protectionist practices of its predecessor, Cristina Fernandez de Kirchner, intervened after the government failed to stem large investment flows and support its falling currency. free.

The all-country MSCI country index, which tracks stocks in 47 countries, lost 0.04% over the day.

US markets were closed for holidays on Monday. European equities shot up as surprisingly positive data helped China overcome the latest set of tariffs cut flat between the United States and China, which came into effect this weekend.

Washington has imposed 15% tariffs on various Chinese products and China has begun to impose new duties on a $ 75 billion target list. However, the two sides will meet again for talks later this month, US President Donald Trump said.

German trade-sensitive stocks rose 0.4% and the pan-European benchmark rose 0.63% at noon in London, up from September. It declined 1.6% in August, as a result of the intensification of the trade war.

"Despite the optimistic outlook for the market, we believe it is increasingly difficult to confidently predict the ultimate prospects of the trade dispute," said Mark Haefele, investment director at UBS Global Wealth Management.

"Given that trade tensions have become the main driving force behind equities, far beyond monetary policy, we do not recommend significantly increasing exposure to equities – especially for those who have money. 39, an adequate strategic allocation. "

Income-generating deferral positions such as some emerging market currencies will work well if central banks soften their policy in response to weaker growth, Haefele added.

According to a survey, manufacturing activity in the euro area has contracted for the seventh month of August, the decline in demand undermining optimism, reinforcing expectations of a monetary easing by the European Central Bank next week.

At its July meeting, the ECB almost promised to relax its policy as growth prospects deteriorated.

Italian bond yields have fallen to their lowest multi-year levels since Italian Prime Minister said this weekend that negotiations on a new government should be completed by Wednesday. The Five Star Movement and the Democratic Party held talks over the weekend on Cabinet positions and a joint agenda.

In the currency markets, the dollar was up 0.1% against a basket of peers.

The euro was down 0.2% at 1.09665 USD (), not far from the low of 1.0963 USD recorded since the beginning of previous years in US trade.

COMMERCIAL WAR

The widest MSCI index of Asia-Pacific shares out of Japan fell 0.24%, led in particular by the 0.5% decline in Hang Seng (Hong Kong) after a another weekend of violent anti-government demonstrations.

Chinese equities, however, advanced, with the CSI300 () index gaining 1.1% despite the escalation of trade disputes. The Council of Chinese State Affairs is committed to strengthening its support for the economy.

The PMI (Caixin / Markit Manufacturing Purchasing Managers Index), a private sector survey, revealed Monday unexpected plant activity in August, although gains were modest and contrasted with official data for suggested a further contraction.

Washington has imposed tariffs on a variety of Chinese products and Beijing has imposed new rights on the latest escalation of a deadly trade war. Studies suggest that tariffs will cost US households up to $ 1,000 a year.

Many market players say the market reaction has probably been overstated by the negative trading flows of algorithm-based players early in Asian trade on Monday. Liquidity could be even more limited than usual due to a US holiday on Monday.

"(The market movement) will show you how many data mining algos are involved in forex-related actions." Has anyone been surprised by these tariffs? which came into effect yesterday? " said Takeo Kamai, head of executions at CLSA in Tokyo.

The tension is also high in Hong Kong. Police and protesters clashed in one of the most intense violence since the unrest that erupted more than three months ago.

Thousands of protesters blocked roads and public transport to Hong Kong airport, and police made several arrests after protesters destroyed cameras and CCTV lamps and dismantled turnstiles. the station.

China, anxious to calm the unrest before the 70th anniversary of the founding of the People's Republic of China on October 1, accused foreign powers, particularly the United States and Britain, of fomenting them.

Oil prices fell on Monday. futures fell by 0.15% to $ 59.16 per barrel; WTI (West Texas Intermediate) futures in the United States remained stable at $ 55.1.