World shares post modest losses in ‘Black Friday’ retreat

Marco Green
December 2, 2019

China on Thursday threatened to retaliate against a USA law backing pro-democracy protesters in Hong Kong with potential measures including barring drafters of the legislation from mainland China, Hong Kong and Macau, the editor of China's state-backed Global Times tabloid said in a tweet.

Adobe Analytics projected USA shoppers spent $5.7 billion on Thanksgiving Day, a 16.4% rise over past year. French and Dutch yields were also off lows hit this week as investors fretted about U.S.

In Europe, Britain's FTSE 100 declined 0.4% to 7,397.66.

US futures were modestly lower, with the contracts for both the Dow Jones Industrial Average and the S&P 500 losing 0.3%. Trading volume was lighter than usual with the markets open for only a half day. In Asia, Hong Kong's equity benchmark Hang Seng Index fell 2%, posting its biggest decline in two weeks.

Still, investors are on the whole betting that despite wild cards such as the USA legislation, it ultimately remains in the interest of both Washington and Beijing to move forward with talks to get a trade deal. It has stayed silent on the issue of whether the US move, viewed as meddling in internal Chinese affairs, might derail the trade talks.

"It's quiet", said Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions.

Markets appeared to be taking the developments in stride, said Stephen Innes of AxiTrader, "on the assumption that the US legislation is unlikely to torpedo phase one". Retailers' sales results will provide investors with fresh insights on the strength of household spending going into next year, following a six-month period in which US shoppers have been the economy's driving force.

World shares slipped on Friday as a leading index strained for a record high, with nerves gnawing away from Asia to Europe over how, or when, the U.S. and China can agree a truce in their damaging trade war.

The S&P 500, Dow Jones Industrial Average and Nasdaq composite closed at all-time highs for the third straight day Wednesday. Expectations for stock volatility have dropped, with the Cboe Volatility Index, or VIX, trading at close to its lowest level in more than a year.

The yield on the 10-year Treasury rose 0.62% to 1.767% while yield on the 30-year Treasury gained 0.46% to 2.203%.

U.S. Steel fell 5.8% following reports that a water pipe burst at the company's steel mill in Gary, Indiana.

Trading volume was light in the truncated session with 3.55 billion shares changing hands on USA exchanges compared with the 6.86 billion average for the last 20 sessions. The Dow picked up 0.2% to 28,164.

MSCI's all-country world index, which tracks shares in 49 countries, shed 0.48%, or about 4 points lower than a record peak of 550.63 it established in January 2018.

New tariffs are set to kick in on many Chinese-made products as of December 15 and negotiators have said they might soon have a preliminary deal that could avert that move.

Pressure is building on both sides to complete a limited "phase one" deal before the deadline, though the Trump administration could end up postponing it, as it did in October, to allow more time for talks.

In energy trading, benchmark crude oil lost 8 cents to $58.03 per barrel in electronic trading on the New York Mercantile Exchange.

Against a basket of six major currencies, the dollar traded flat at 98.387, and edged up slightly against the Japanese yen. The euro stood at $1.1005, and has been stuck in a tight range for the past week.

Crude oil futures plummeted 4.41% to $55.55 per barrel and Brent crude dropped 3.98% at $60.75.

Other reports by Click Lancashire

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