Tariff fears hit car shares but global shares in general rise

London — World shares crept higher on Thursday as cars become the latest focus of US protectionism worries, while Turkey’s lira slumped again after a huge, emergency interest-rate hike failed to stem its problems.

Markets had plenty coming up including the read-out from the ECB’s most recent meeting, but in Asian and early European trading it was US plans to launch a probe into vehicle imports that drove the biggest moves.

Japan’s Nikkei ended down 1.1% after Nissan, Mazda and Toyota skidded, while BMW, Daimler and Volkswagen reversed between 1.7% to 2.3%, though the broader market nudged forward.

“The car makers are getting a bit of a bashing, which is not really surprising following Trump’s comments overnight,” said CMC Markets analyst Michael Hewson.” “Personally I think he is playing to his voter base, but in the broader context of the trade story it is not positive.”

Trump’s commerce secretary, Wilbur Ross, said on Tuesday that there was “evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry”, and promised a “thorough, fair and transparent investigation”.

Trump said on Twitter: “There will be big news coming soon for our great American autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!”

The worry for economists is that the move could lead to tariffs similar to those imposed on steel and aluminium in March.

Adding to jitters, Trump had also called for “a different structure” in any trade deal with China, fuelling uncertainty over the negotiations. Beijing had fired back, calling the car probe an “abuse” of national security clauses.

In the currency markets it was Turkey’s lira that remained the big mover.

It weakened as much as 3%, surrendering most of gains it made the previous evening after the country’s central bank jacked up its key interest rate by 300 basis points, in an emergency move to prop up the plunging currency.

Investors have sold the lira on concerns about the central bank’s ability to tame double-digit inflation, particularly after President Recep Tayyip Erdogan — a self-described “enemy of interest rates” — said he expected to assert more policy control after June 24 elections.

The lira, which initially firmed in early trade, weakened as far as 4.7414 from a close of 4.59. It hit a record low of 4.9290 on Wednesday before the central bank’s move.

Source: businesslive.co.za