The markets take stock after the worst day of FTSE since the Brexit result

07-12-2018 09:12

The recent sell-off for global equity markets has slowed after the FTSE 100 suffered its largest percentage decline since the day after the Brexit referendum.

Asian indices were mostly in positive territory on Friday after the quieter end of trading in New York, while the opening of the FTSE in early deals rose 1.5% the loss of the previous day amounted to 3.2%,

Investors were scared when it became the chief financial officer of Chinese telecommunications giant Huawei had been arrested at the request of the country's trade war enemy, the United States.

Meng Wanzhou has been a senior executive at Huawei. Image: Huawei
Meng Wanzhou has been a senior executive at Huawei and the daughter of the company founder. Image: Huawei

Meng Wanzhou is threatened with extradition from Canada over allegations that the global company has violated US sanctions against Iran, despite a bail hearing scheduled for later on Friday.

Their imprisonment heightened fears that a truce in the trade war, agreed by Donald Trump and his Chinese counterpart Xi Jinping at last weekend's G20 summit, was not the breakthrough that the market originally intended.

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A trade agreement between the two countries could be agreed within 90 days as the head of the IMF calls for a de-escalation of tensions.

:: & # 39; Bad Trump & # 39; is to blame in global markets

Add to this the concern about the US economy and the recent slump in oil costs – since the OPEC cartel does not agree with production cuts to boost prices – there is a toxic mix of factors that investors should consider.

After the stock market bubble across Europe, the Dow Jones ended Thursday's trading session with a 0.3% drop on Wall Street, after initially dropping nearly 800 points. The technology-dominated Nasdaq also fought back and closed the session slightly up.

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Sky economics editor Ed Conway explains the slump in global equity markets

Hong Kong's hand Seng, the Shanghai Composite and the Nikkei in Tokyo were all on the last day of the trading week on the upswing.

The gains of FTSE were mitigated by some retail negativity after the Primark owner reported "negative" like-for-like sales in November before the AGM.

Associated British Foods led the Fallers – by 2.1%. Other stock markets in Europe also posted preliminary gains after Thursday's routine.

Part of the market support was the hope that the US Federal Reserve will respond to growing fears of a US recession by not raising interest rates next year as much as previously stated.

Ahead of a major US jobs report on Friday forecasting stable but not spectacular hiring and wage growth, a report in the Wall Street Journal said the bank was planning a "wait-and-see" approach.

Rising interest rates make the bond more expensive to invest. This was one of the main reasons for selling on world markets this year, as central bank incentives were gradually phased out after the crisis.

Analyst Neil Innes, head of Asia-Pacific trading at OANDA, suggested that markets may have over-reacted this week.

He told AP news agency, "Huawei's headline could not have come at a worse time, and the market wavered as the G20 case became confused.

"However, masking the problems of trade warfare with cautious shifts from the big central banks adds only a whole new level of unintentional confusion that comes at the end of the year."

He added, "I'm trying to argue that we've gone through a market-driven event and not a significant shift to the dark economic side where this doom and" tribulation "came out of their caves this week."