Global share gains wane on concern about world economy

The new US tariff threats against Europe also point to a worrisome prospect of a broadening trade dispute, said Michael McCarthy, chief markets strategist at CMC Markets in Sydney, in a note to clients.

“The problem is the widening of the dispute. Europe, the US and China account for almost two thirds of global GDP,” he said. “An ongoing disruption to trade between these three major economies, prosecuted for domestic political purposes, could sink global growth.”

E-mini futures for the S&P 500 index of stocks were lower.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.28%, helped by a 1.23% gain in Hong Kong shares as investors caught up to Monday’s global rally. Markets in Hong Kong had been closed on for a holiday.

But Chinese blue chips dipped 0.13% and Korean shares lost 0.3%. Japan’s Nikkei finished up 0.11%.

Australian shares were flat, pulling back from earlier gains after the Reserve Bank of Australia cut its benchmark interest rate by 25 basis points to a record low 1.0%, as expected. However, the RBA left limited room for more cuts, raising the possibility of unconventional policy easing.

The Australian dollar pulled up from recent lows to gain 0.32% against the US dollar at $0.6985.

The safe-haven yen strengthened against the dollar, which fell 0.2% to ¥108.24 per dollar, and the euro was flat at $1.1288. The dollar index, which tracks the dollar against major rivals, was 0.1% lower at 96.758.

In debt markets, Italian government bonds rallied after Italy cut its 2019 budget deficit target to avoid EU disciplinary action, potentially easing another major concern for markets.

In commodity markets, oil gained as Opec agreed to extend supply cuts until next March, although prices were pressured by worries demand may ease amid hints of a slowdown in the global economy.

Brent crude was up 0.3% at $65.25 per barrel. US crude rose 0.1% to $59.15 a barrel. Spot gold added more than 0.5% to $1,392.11 per ounce.

Reuters