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World shares retreat on rise in Sino-U.S. tensions

Stock MarketsJul 24, 2020 06:22AM ET
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2/2 © Reuters. FILE PHOTO: Security guard wearing a face mask stands near the Bund Financial Bull statue and a display showing an image of a medical worker on The Bund in Shanghai 2/2

By Tom Arnold and Wayne Cole

LONDON/SYDNEY (Reuters) - Global shares skidded further from five-month peaks on Friday as a bounce back in European business activity did little to ease the jitters surrounding Sino-U.S. tensions, while gold approached a record high.

The mood darkened after Beijing ordered the United States to close its consulate in Chengdu, in retaliation for being told to shut its consulate in Houston earlier this week.

"An escalation in U.S.-China tensions that could have hugely negative consequences on stock market leadership, particularly around the US tech giants, is worrying," said International markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp.

"Even more so, if President Trump pulls the free pass into China, and things could turn quite ugly into the weekend as traders will have no option but pare risk."

Unsurprisingly, Chinese blue chips led the declines, retreating 4.4%, wiping out a week of gains.

European shares were on course for their worst day in a month, with the pan-region Euro Stoxx 50 down 1.9%.

Technology stocks led losses, following their U.S. peers overnight, while the China-sensitive basic materials sector lost 2.4%.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.9%. Tokyo was closed for a holiday, but Nikkei futures were trading 1% lower.

E-Mini futures for the S&P 500 edged down 0.8%.

(GRAPHIC: U.S.-China tensions - https://fingfx.thomsonreuters.com/gfx/mkt/nmopaljkxva/Pasted%20image%201595576726782.png)

Investors took little comfort from purchasing managers' index (PMI) data which showed euro zone business activity bounced back to growth in July as more parts of the economy that were locked down to curtail the spread of the coronavirus reopened.

British businesses experienced the fastest upturn in five years during July and data for the United States follow later in the day.

The market's dogged optimism on economic recovery had been challenged on Thursday by data showing the number of Americans filing for unemployment benefits unexpectedly rose last week for the first time in nearly four months.

The euro was at $1.16020, close to its highest level since October 2018, having enjoyed a winning streak for all of July, as the European Union's passing of a 750 billion-euro recovery fund restored confidence.

The yen was up 0.6% at 106.25, its highest since June 23.

The Chinese yuan, a barometer of Sino-U.S. tensions, looks set for its worst week in three months. It was down 0.2% at 7.0276 per dollar in the offshore market.

Italy's 10-year bond yield was steady at around 1.05%, holding near Thursday's 4-1/2 month low at 1.04%. Germany's Bund yield was a touch lower on Friday at -0.49%.

The combination of super-loose money and negative real bond yields has burnished the attractiveness of gold, which pays no yield but is supply constrained.

The precious metal was last at $1,894.23 an ounce for its biggest weekly gain in more than three months as it held firm near a nine-year high.

Analysts at RBC Capital Markets noted gold-backed exchange traded product holdings had already reached record peaks.

"The level of COVID-19 uncertainty, low and negative real and nominal rates, politics and geopolitics have driven gold prices sharply higher, and pushed allocations among investors ever higher," they said in a note.

Oil prices were ending the week on a flat note, having failed to hold a five-month high as worries about global demand offset a weaker U.S. dollar.

Brent crude was down 1 cent at $43.30 a barrel, while U.S. West Texas Intermediate (WTI) crude up 1 cent at $41.08.

(Graphic by Vidya Ranganathan; Editing by Toby Chopra)

World shares retreat on rise in Sino-U.S. tensions
 

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Comments (16)
Vv Pp
Vv Pp Jul 24, 2020 8:11AM ET
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the joke with leaders like Trump, Boris etc should stop ASAP
Fabrice Lange
Fabrice Lange Jul 24, 2020 7:47AM ET
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Mr Trump China is not angel we know and we should be strong. BUT it'really not a good idea to declare the war NOW !! Usa needs to recovery before !!
Katrina Zarkova
Katrina Zarkova Jul 24, 2020 3:07AM ET
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you mean free doom and demo crazy promised by Mad F/.king P0/rnpeo?
Kaveh Sun
Kaveh Sun Jul 24, 2020 1:42AM ET
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Next, kick the 5c army out.
Js Sm
Js Sm Jul 24, 2020 1:36AM ET
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Houston must be cold this time of year hxxps://www.liveleak.com/view?t=sWBuQ_1595539001
Johnson Gray
Johnson Gray Jul 24, 2020 1:30AM ET
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a new word "stymied"
LI SH
LI SH Jul 24, 2020 12:53AM ET
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Freedom has a price, after all the carnage, whose currency will you trust more? Especially knowing that Chinese CCP can arbitrarily take away your “wealth”, loot your intellectural property, make your loved ones disappear...
Johnson Gray
Johnson Gray Jul 24, 2020 12:53AM ET
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lol falungong hk tw ******telling others what to do with their money
Gerald Zhang
Gerald Zhang Jul 24, 2020 12:53AM ET
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do you mean freedom to eat dogs
Luke Aye
Luke Aye Jul 24, 2020 12:29AM ET
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China lion is roaring now... oink... oink...
John Pat
John Pat Jul 23, 2020 10:25PM ET
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Once other nations start dumping the dollar ...tthat's when the fun starts!
David David
David9 Jul 23, 2020 10:13PM ET
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I told you guys...the China Lion is about to Roar. When she Roars, worldwide markets will have to crumble back down.
Plopseven Schwartz
Plopseven Schwartz Jul 23, 2020 10:13PM ET
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LI SH I’m as patriotic as can be, but Lao Tzu once said “There is no greater danger than underestimating your opponent.”
Jesse Mulliniks
Jesse Mulliniks Jul 23, 2020 9:57PM ET
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Kinda feels like the entire global economy is on the brink of collapse
Bobby McRoogle
Bobby McRoogle Jul 23, 2020 9:57PM ET
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How long have you been saying that?
eddie glass
eddie glass Jul 23, 2020 9:40PM ET
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yes clearly it has nothing to do with the fact that US markets were down today... just ignore that futures are green during chinese trading hours. this clickbait globalist media is just more garbage fake news.
Plopseven Schwartz
Plopseven Schwartz Jul 23, 2020 9:40PM ET
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Not all news you don’t like is fake.
Dugan Webb
Dugan Webb Jul 23, 2020 9:16PM ET
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Unemployment rise should have been expected. This is the primary reason that Newsom shut down CA economy again (about two weeks ago) so of course the largest state by population is going to have a HUGE effect on unemployment numbers.
Devin North
Devin North Jul 23, 2020 9:15PM ET
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Uh, one hr after this markets up. 👀🤔Report, dont speculate, thats how you help investors.
Cali Cartel
Cali Cartel Jul 23, 2020 9:05PM ET
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After virus is done. ( if ) The U.S will focus on china.
Murariu Paul
Murariu Paul Jul 23, 2020 9:05PM ET
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as long as so many American Company's relays on Chinese manufacturing and technology there is no war to win. It's to late, battle with China is lost.....and China will do with market whatever they want
Jay West
Jay West Jul 23, 2020 9:05PM ET
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Murariu Paul time to bring such jobs back to the US. SLOW but feasible process in the works.
Plopseven Schwartz
Plopseven Schwartz Jul 23, 2020 9:05PM ET
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Murariu Paul I wrote a short bit on this a while back. The American military doesn’t run on gunpowder and men, it runs on microchips and electronics. A war with china without domestic American industrialization in these industries is a severe handicap.
Jacky Lee
Jacky Lee Jul 23, 2020 8:30PM ET
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Who being unreasonabke first?
 
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