World shares fall for a fifth day in anticipation of trade-war escalation

Investors are also watching for developments as the US and Canada resume talks about revamping the North American Free Trade Agreement (Nafta). Canada insisted there was room to salvage the pact despite few signs that a deal is imminent.

The dollar, considered a safe haven at times of turmoil because of its status as the world’s reserve currency, has generally benefited from the trade conflicts. It has gained 8% since the end of March, with currencies in emerging markets taking a hammering. However, measured against a basket of currencies, the dollar retreated from the two-week highs it reached earlier this week to stand 0.1% lower at 95.07.

The euro was a tad stronger at $1.1636. Sterling held on to gains made on Wednesday as investors positioned for a favourable Brexit outcome. It was last up 0.1% at $1.2910.

Emerging markets have been hit by the financial crises in Argentina and Turkey. In Indonesia’s central bank has had to intervene several times in recent weeks to stem the rupiah’s slide. Indonesia’s benchmark stock index was last up nearly 1% while the rupiah also gained a bit.

MSCI’s index of emerging-market currencies, which had earlier paused near 15-month lows, was up 0.1% on the day after two straight days of heavy declines. However, analysts warned about further losses because investors were no longer looking at Argentina, Turkey and SA as isolated cases. They were fretting over the impact of rising US inflation and interest rates on heavily indebted economies.

“As global monetary conditions slowly tighten, the global economic cycle rolls over and the US president disturbs the global trade cycle, there’s definitely more to the emerging-market sell-off than a few unrelated spots of weakness,” wrote strategists at Société Générale in a note to clients.

The emerging-market equity index has been crunched in the past month or so, falling for six consecutive sessions and down more than 3% this week. A range of factors have hit the stocks: policy-tightening by the US Federal Reserve, the crises in Turkey and Argentina, the China-US trade war and broader concerns about China’s economy.

“We doubt that the main factors which have caused equities across much of the emerging world to weaken together recently will go away just yet,” Capital Economics said in a note.

In commodities, oil prices fell as emerging-market woes weighed on sentiment. US crude eased 0.1% to $68.65 a barrel. Brent was last down 0.1% at $68.64.

Gold was stronger with spot gold up half a% at $1,202.15 an ounce.

Reuters