The ructions in global financial markets are continuing into the end of the week as US President Donald Trump’s trade war with allcomers shifts its attention to Europe.
The benchmark S&P 500 was down 1.5% in afternoon trading and nearing correction territory – where it would be 10% off its peak – as Trump threatened a 200% tariff on alcohol imports from across the pond if the European Union pressed ahead with its own retaliatory levies to US steel and aluminium tariffs.
European liquor firms such as Pernod Ricard, Davide Campari-Milano and LVMH were all knocked by the news, and France’s CAC 40 stock market index declined 0.6%.
That might bode well for New Zealand winemakers, such as Delegat Group, which counts North America as a major market.
The tech-heavy Nasdaq Composite continued its decline amid the heightened uncertainty, with investors punishing disappointment such as Adobe sliding 12% after its quarterly earnings missed expectations.
In saying that, chipmaker Intel’s shares jumped 16% after hiring industry veteran Lip-Bu Tan as its new chief executive.
Meanwhile, Russia’s reticence in signing up to a 30-day ceasefire to broker peace with Ukraine added to the general unease in markets, with Wall Street’s fear gauge – the Chicago Board Options Exchange’s volatility index – spiking higher.
It’s that time
And the US federal government faces a potential shutdown after the Democrat’s Senate minority leader Chuck Schumer warned there wasn’t enough support to pass a bill to continue funding federal agencies.
“More tariff threats, a possible US government shutdown and doubts over a Ukraine-Russia peace deal are all overhanging the market, resulting in weaker risk appetite,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “US equities are down significantly again, US Treasury yields are lower, and the yen has outperformed.”
The New Zealand dollar fell to 56.97 US cents at 7am in Auckland from 57.31 cents yesterday and dropped to 84.09 yen from 84.84 yen as investors sought out safe harbours.
That quest for safety bolstered gold, with the precious metal’s futures price rising 1.6% to US$2,994 an ounce.
The pall is casting itself over the Pacific, with Australian futures pointing to a 0.1% decline for the S&P/ASX 200 index, itself close to entering correction territory. New Zealand’s S&P/NZX 50 index is almost 8% off its peak in December.
Local data today include Statistics New Zealand’s partial inflation indicators for February, and the BNZ-Business NZ manufacturing activity gauge.
The prime minister’s infrastructure investment summit continues in Auckland, with the government yesterday unveiling several public-private partnership opportunities to the gathering of professionals from around the world.
