London (AFP) – Hong Kong’s stock market suffered its worst day in 16 years Tuesday, and oil prices slid as a strong rally thanks to China’s planned economic stimulus faded. Shanghai closed up 4.6 percent, but analysts cautioned that the sizeable gain reflected the index catching up slightly with other markets following a week-long national holiday in China. China-linked shares “lost momentum as the country…failed to offer anything new on expected stimulus measures,” noted Neil Wilson, chief market analyst at Finalto trading group.
Global stock markets have been rallying in recent sessions on hopes of improved Chinese demand for goods ranging from oil and metals to luxury items. However, share prices of companies across all three sectors slumped Tuesday, pushing Europe’s main indices into the red as the trading day approached the halfway stage. Shares in European luxury and spirits companies were sharply lower as Beijing announced anti-dumping measures on brandy imported from the European Union. Remy Cointreau — whose brands include Louis XIII, Remy Martin, and Cointreau — tumbled more than eight percent. Pernod Ricard, which owns Martell cognac, dropped nearly four percent.
The Chinese measures include provisional tariffs of 39 percent for Hennessy, 38.1 percent for Remy Martin, and 30.6 percent for Martell. Louis Vuitton-maker LVMH, which also owns Hennessy cognac, shed more than four percent, while Gucci-owner Kering retreated over seven percent. In London, Burberry shares retreated 5.6 percent, with homebuilder Vistry marking the biggest fall among leading stocks, plunging 25 percent on a profit warning that failed to drag down the sector overall. Among miners and oil giants, Rio Tinto lost 4.6 percent, and BP slipped 1.7 percent.
Oil prices also sank more than two percent, with uncertainty over commodities-hungry China offsetting worries about a regional war in the Middle East as Israel considers its response to Iran’s missile attack last week. Investors had rushed back into Chinese stocks since authorities last month began announcing plans to reverse a long period of tepid economic growth in China, the world’s second-biggest economy. Among the measures unveiled were interest rate cuts, an easing of how much banks must keep in reserve, and relaxed rules on buying a home.
The markets have been under intense pressure in recent years as traders fretted over government crackdowns on multiple sectors, with property and tech among those most badly affected. Most of the pledges were aimed at providing much-needed support to the real estate market, which is a major driver of growth but has been battered by a debt crisis at some of the country’s biggest developers. Tuesday’s heavy selling came after Wall Street’s three main indices began the week with losses, as forecast-busting US jobs data dealt a blow to hopes that the Federal Reserve would announce another significant cut to interest rates.
While the news assuaged concerns that the world’s biggest economy could be in danger of slipping into recession, the prospect of a more gradual reduction in borrowing costs led some investors to cash out. The dollar was down slightly against main rivals ahead of US consumer and producer price data expected later in the week.
– Key figures around 1030 GMT –
Hong Kong – Hang Seng Index: DOWN 9.4 percent at 20,926.79 (close)
London – FTSE 100: DOWN 1.1 percent at 8,214.20 points
Paris – CAC 40: DOWN 0.8 percent at 7,517.39
Frankfurt – DAX: DOWN 0.3 percent at 19,047.16
Shanghai – Composite: UP 4.6 percent at 3,489.78 (close)
Tokyo – Nikkei 225: DOWN 1.0 percent at 38,937.54 (close)
New York – Dow: DOWN 0.9 percent at 41,954.24 (close)
West Texas Intermediate: DOWN 2.2 percent at $75.48 per barrel
Brent North Sea Crude: DOWN 2.1 percent at $79.23 per barrel
Euro/dollar: UP at $1.0990 from $1.0973 on Monday
Pound/dollar: UP at $1.3092 from $1.3084
Dollar/yen: DOWN at 147.88 from 148.13 yen
Euro/pound: UP at 83.91 pence from 83.86 pence
© 2024 AFP
