World stocks mixed as tech giants do well but trade-war fears harry the market

New York — World stocks were mixed on Wednesday, with fears of an imminent escalation in the tariff war between the US and China holding back gains, though robust results form technology giant Apple boosted a key index on Wall Street.

Shares of Apple, which jumped 4.7% to a record high of $199.26 after predicting a surge in current-quarter sales, was the biggest advancer on all three major US stock indices. Still, market participants said Wednesday’s reversal after a recent sell-off of tech shares might not be sustainable.

“Whether that is a long-lasting effect on the tech sector is a question that cannot be answered,” said Randy Frederick, vice-president of trading and derivatives for Charles Schwab in Austin. “There is a big additional tariff that is being weighed and could be put into place at any moment, which is a concern.”

The US administration plans to propose tariffs of 25% instead of 10%, on $200bn worth of imported Chinese goods. Beijing vowed to retaliate if the US slapped further tariffs.

The Dow Jones Industrial Average fell 24.36 points, or 0.1%, to 25,390.83; the S&P 500 lost 0.8 points, or 0.03%, to 2,815.49; and the Nasdaq Composite added 23.5 points, or 0.31%, to 7,695.29.

MSCI’s gauge of stocks across the globe shed 0.12%, while the pan-European FTSEurofirst 300 index lost 0.46%. Concern over what a full-blown trade conflict would mean for China and the global economy weighed on Chinese shares, the offshore yuan and the Australian dollar.

Wednesday’s reaction remained fairly muted, however, as investors turned their attention to central bank decisions. “Maybe the market is under-estimating the economic impacts of the tariffs and that is why it is keeping calm,” said Thu Lan Nguyen, a currencies strategist at Commerzbank in Frankfurt.

The US Federal Reserve concludes its monetary policy meeting on Wednesday and market participants are preparing to peruse the Fed’s statement for signs of whether the expected two rate hikes for the rest of 2018 can be cemented into pricing.

The yield on the benchmark 10-year US treasury note broke above 3% for the first time since June 13 after the US government said it intended to boost borrowing from the bond market in the coming quarter to fund spending and debt obligations. The government needs to fund a rising budget deficit even as the Federal Reserve continues to reduce its massive bond portfolio.

The yen strengthened 0.05% against the dollar to ¥111.83 after Tuesday’s pledge by the Bank of Japan (BOJ) to keep rates extremely low for an extended period. Traders appeared to be putting the BOJ’s tolerance for higher yields to the test on Wednesday as the benchmark 10-year Japanese government bond yield rose to 0.12% in its biggest one-day rise in two years.

Oil prices fell on data showing an unexpected rise in US crude stockpiles. The slump in crude prices comes after their largest monthly decline in two years in July. US crude fell 1.69% to $67.60 a barrel and Brent was last at $72.68, down 2.06% on the day.

Reuters