LONDON: European stock markets dropped today on intensifying concerns about the impact of an all-out global trade war between China and the United States.
US President Donald Trump’s trade policy also faced market scrutiny Thursday after Washington slapped Russia with new sanctions over Moscow’s alleged involvement in a nerve agent attack in Britain.
On currency markets, the ruble extended Wednesday’s losses and is now down more than four percent against the dollar after news of fresh US sanctions on Moscow.
And the pound also remains rooted near one-year lows on fears Britain will leave the European Union next year with no deal to trade with the bloc, with the country’s trade secretary and central bank boss recently warning that the chances of such a scenario are increasing.
“The market is clearly getting more nervous over the possibility of a no-deal Brexit, which would be a messy outcome for the UK economy,” said Rodrigo Catril, senior foreign-exchange strategist at National Australia Bank.
Investors remain anxious about the global impact of a burgeoning US-China trade war between the world’s two largest economic superpowers, and with the US midterm election looming in November.
Beijing said Wednesday it would impose 25 percent tariffs on $16 billion of US goods from August 23, retaliating in kind to a warning from US officials the day before and escalating a crisis that pits the world’s top two economies against each other.
While the row has sent global markets into convulsions this year, the latest development had been widely expected, with Wall Street ending mixed.
“Investors are still wondering how quickly if at all, the tariffs so far will start to affect companies and then economies,” IG analyst Chris Beauchamp told the Media.
“We know the theory, but the actual developments will take time to become clear.”
“It is also not yet clear how far it (the trade war) will all run – until the mid-terms? Or further, until he can really get some key concessions from China,” pondered Beauchamp.
“Market resilience over the past few weeks suggests investors have calmed down for the time being, at least where US equities are concerned.”
Asian stocks however largely brushed off China’s tit-for-tat response, with most markets rising on Thursday.
But in Europe, the mood turned gloomy, as Frankfurt stocks fell 0.2 percent and Paris dropped 0.5 percent in early afternoon deals.
London shed 0.7 percent around midday as the British market was hit also by a number of companies going ex-dividend – meaning the stock’s owners are no longer entitled to the most recently declared dividend.
Added to the picture, the Kremlin on Thursday slammed as “unacceptable” the fresh US sanctions — but said Russia still hopes for constructive relations with Washington.
“I don’t think the Russia move is another front in the (trade) war, however, since Russia is the United States’ 23rd largest partner, and thus not very high on the list,” noted Beauchamp, adding that Trump was likely influenced by fears he was “being too soft on Moscow”.
London – FTSE 100: DOWN 0.7 percent at 7,719.41 points
Frankfurt – DAX 30: DOWN 0.2 percent at 12,610.88
Paris – CAC 40: DOWN 0.5 percent at 5,476.54
EURO STOXX 50: DOWN 0.4 percent at 3,480.90
Tokyo – Nikkei 225: DOWN 0.2 percent at 22,598.39 (close)
Hong Kong – Hang Seng: UP 0.9 percent at 28,607.30 (close)
Shanghai – Composite: UP 1.8 percent at 2,794.38 (close)
New York – Dow Jones: DOWN 0.2 percent at 25,583.75 (close)
Euro/dollar: DOWN at $1.1592 from $1.1610 at 2100 GMT
Pound/dollar: DOWN at $1.2876 from $1.2882
Dollar/yen: UP at 111.12 yen from 110.98 yen
Oil – Brent Crude: UP four cents at $72.32 per barrel
Oil – West Texas Intermediate: DOWN three cents at $66.91
Meanwhile, the world’s biggest temporary staffing agency said today it saw revenue growth last quarter as uncertainty in key European markets helped drive demand for short-term workers.
Economic growth slowed in Europe in the second quarter, but a range of other issues also discouraged firms from hiring permanent staff, said Adecco.
“Between the elections in Italy, Brexit, uncertainty in Catalonia, the strikes in France, there are lots of elements that weren’t favorable to growth,” said firm’s chief executive Alain Dehaze.
“Even if just barely, this lack of clarity had a tendency to push companies to prefer flexible hiring,” he said after the company announced its second-quarter results.
Overall, Adecco’s revenue edged 1 percent higher to 6.1 billion euros ($7.0 billion) in April through June. Net profits fell by 11 percent to 170 million euros as the company stepped up investments to modernize and restructure its operations.
Revenue growth was fastest in Italy, at 11 percent when adjusted for factors like changes in the value of the currencies and the number of working days.
Italy has been gripped by the uncertainty that was aggravated by an election that finally led to a populist government that has already moved to tighten restrictions on firing staff.
In France, Adecco’s largest market, revenues rose by 8 percent for placement of temporary workers, with increases driven by the manufacturing, logistics, and automotive sectors.
France also has labor market rules that make it more difficult to reduce staff numbers when business slows, which employers say to discourage them from taking on permanent employees.
“The impact of the strikes was clearly marked, but it is difficult to quantify in terms of hiring,” said Dehaze.
Meanwhile, in Britain and Ireland, Adecco also saw strong revenue growth of 6 percent thanks in part to winning new contracts. Ireland will feel the largest impact from Britain leaving the EU if London is not able to work out easy access to the single market.
In Spain and Portugal, revenues rose by 5 percent, after having grown strongly in previous quarters due to the recovery of the Spanish economy and uncertainty triggered by Catalonia’s independence drive.
In the United States, where employers are having increased difficulty in finding workers, revenues rose 3 percent, although this represented the best result in three years.
Adecco’s shares fell by 2.6 percent in midday trading while the Swiss SMI index was 0.3 percent lower.
Improving ease of doing business
ISLAMABAD: PM has today directed Board of Investment (BoI) chairman to present a comprehensive plan, listing all the issues in various sectors and their sub-sectors and how the processes could be streamlined to simplify procedures related to government approvals, addressing taxation issues, dispute resolution and facilitating investors/businesses.
He said this while chairing a high-level meeting to review progress on improving ease of doing business and creating an enabling environment to facilitate the conversion of interest of the local as well foreign investors into actual investments in the country. The meeting was attended by Finance Minister Asad Umar, Law Minister Dr. Farogh Naseem, Commerce Advisor Abdul Razak Dawood, BoI Chairman Haroon Sharif, federal secretaries and senior officials.
BoI Chairman Haroon Sharif while briefing the prime minister about the steps taken so far said the Board would be serving as an agent of change for facilitating business transactions, removing impediments in the way to the materialization of investors’ interest into actual investments and smooth functioning of the businesses in the country. He also briefed about various issues being faced by the business community including taxation, access to finance, regulation and policy issues and red-tapism.
He said the BoI was also actively working with the provinces and relevant ministries for removing barriers in the way of establishing Special Economic Zones. He said special efforts were being made to bridge the gap between private and public sector and to reach out to the private sector to revive their confidence in government policies and put in place a framework that facilitates business community in its business pursuits. The BoI chairman also briefed about Naya Pakistan Diaspora Fund which was being set-up to promote SMEs and rural development in key areas of education, health, and infrastructure development.
He also apprised the prime minister of the investment framework which had been structured for attracting and materializing investment from UAE, KSA, China, Japan, and Malaysia. It was decided during the meeting that the prime minister would chair a review meeting every month on ease of doing business in the country.
KARACHI: Removal of encroachments
KARACHI: The Anti-Encroachment Department of the Karachi Metropolitan Corporation (KMC) demolished more than 35 shops and other constructions in front of shops and footpaths with the help of heavy machinery in district West and Korangi on Tuesday.
Metropolitan Commissioner Dr. Syed Saif-ur-Rehman who is monitoring anti-encroachments drive in the city, said that footpaths are for pedestrians and no one can be allowed to block the footpaths by extending shops or putting stuff to create problems for citizens, said a statement. He said that the anti-encroachment drive was meant to bring improvement to the city and make it clean and beautiful.
Traders community have so far cooperated with the KMC in its action against encroachments and removed their stuff and an additional portion of their shops.
He said that the city roads, streets, and footpaths are widened after the removal of encroachments. Meanwhile, senior director anti-encroachments Bashir Siddiqui with his team took action in districts West and Korangi.
They removed the encroachments from different areas including Pak Colony in district West and Malir Saudabad in district Korangi where walls, shops, and other structures were demolished.
Tokyo stocks close lower
TOKYO: Shares here closed lower today as uncertainty caused by factors including Brexit and trade tensions weighed on the market, wiping out early gains.
The benchmark Nikkei 225 index fell 0.34 percent or 71.48 points to 21,148.02 while the broader Topix index was down 0.91 percent or 14.50 points at 1,575.31. Tokyo shares opened higher, rebounding from sharp drops the previous day, with investors apparently relieved that Wall Street eked out gains after a volatile session.
“But sentiment worsened as investors remained cautious amid uncertain elements such as the postponement of Britain’s Brexit vote and the US-China trade war,” Daiwa Securities senior technical analyst Hikaru Sato told AFP. European stock markets and the pound slid Monday after British Prime Minister Theresa May said she was delaying a parliamentary vote on her deal to leave the EU after conceding it would not win sufficient support.
“The market is concerned that the postponement uses up valuable time before the 29th March exit date, and the risk of a no-deal scenario is growing,” David de Garis, director of economics and markets at National Australia Bank said in a commentary. The dollar slipped to 113.10 yen in late Asian trade from 113.35 yen in New York Monday afternoon. In individual stocks trade, SoftBank Group jumped 2.44 percent to 8,827 yen after announcing Monday it aims to raise over $23 billion by listing its Japanese mobile unit next week.
Nissan kept falling, down 3.10 percent at 915.7 yen after tumbling 2.90 percent on Monday as ousted chairman Carlos Ghosn was charged and faced new allegations of alleged financial misconduct. Prosecutors also charged Nissan for filing documents that allegedly understated Ghosn’s earnings. The Nikkei daily reported Tuesday that Nissan plans to book years of under-reported compensation paid to Ghosn as expenses in the year to March 2019 all at once, a move that could worsen the automaker’s balance sheet. Toyota lost 1.09 percent to 6,745 yen but Sony rose 0.72 percent to 5,735 yen.