Global stocks fall on concerns over Pelosi’s visit to Taiwan

TOKYO – Global stocks were mostly weaker on Tuesday as an expected visit by US House Speaker Nancy Pelosi to Taiwan prompted threats from Beijing.

European stocks were mostly lower in early trading, after benchmarks ended mostly lower in Asia.

France’s CAC 40 slid 0.5% in early trading to 6,406.15, while Germany’s DAX lost 0.7% to 13,388.26. Britain’s FTSE 100 was little changed, rising less than 0.1% to 7,416.42. The future of the S&P 500 lost 0.6% while that of the industrialists of the Dow lost 0.4%.

China considers Taiwan its own territory and has repeatedly warned of “serious consequences” if the reported trip to island democracy continues. Pelosi said she is traveling to Singapore, Malaysia, South Korea and Japan for talks on a variety of topics, including trade, COVID-19, climate change and security.

A d

Although there was no official announcement, local media in Taiwan reported that Pelosi will arrive on Tuesday evening, making her the highest ranking American to visit in more than 25 years.

“Sentiment of risk took a hit following reports suggesting that US House Speaker Pelosi is due to continue her visit to Taiwan. Investors will likely look for defensive positions as the geopolitical situation may worsen over the next few days,” said Anderson Alves of ActivTrades.

In Asian trading, Japan’s benchmark Nikkei 225 fell 1.4% to 27,594.73. The South Korean Kospi slipped 0.5% to 2,439.62. Hong Kong’s Hang Seng fell 2.4% to 19,689.21, while the Shanghai Composite plunged 2.3% to 3,186.27.

“The first great relief will be Pelosi’s safe arrival in Taiwan, followed by his safe departure. Neither side wants a real war, but the risk of an accident or even the escalation of a war game aggressive is real, which could always lead to a tactical error,” said Stephen Innes, managing partner at SPI Asset Management.

A d

Australia’s S&P/ASX 200 edged up 0.1% to 6,998.10.

The Reserve Bank of Australia on Tuesday raised its benchmark interest rate for a fourth consecutive month to a six-year high of 1.85%. It was the third straight increase of half a percentage point. When the central bank raised the rate by a quarter of a percentage point at its monthly board meeting in May, it was the first rate hike in more than 11 years.

The cash rate is now at its highest level since May 2016, when the bank cut the rate from 2% to 1.75%.

On Monday, the S&P 500 gave up an early gain to end down 0.3% at 4,118.63. The Dow Jones Industrial Average fell 0.1% to 32,798.40 and the Nasdaq 0.2% to 12,368.98. Smaller company stocks also gave up some of their recent gains, pushing the Russell 2000 0.1% to 1,883.31.

A d

Investors worry about high inflation, while a major concern remains whether central banks will raise interest rates too aggressively and push economies into a recession.

More than half of S&P 500 companies have released their latest results, most of which were better than expected. Many companies have also warned that inflation is hurting consumer spending and squeezing operations. Companies have raised their prices to try to maintain their profits.

Wall Street will also receive several updates on the labor market, which has remained strong. The Labor Department will release its June job openings and labor turnover survey on Tuesday and its closely watched monthly jobs report for July on Friday.

A spike in oil prices throughout the year only compounded the impact of inflation. U.S. crude oil prices have risen about 25% in 2022, pushing U.S. gasoline prices to record highs.

A d

In energy trading, benchmark U.S. crude fell 48 cents to $93.41 a barrel in electronic trading on the New York Mercantile Exchange. Brent, the international standard, fell 66 cents to $99.37 a barrel.

In currency trading, the US dollar fell slightly to 130.89 Japanese yen from 131.71 yen. The euro traded at $1.0235, down from $1.0259.

___

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Comments are closed.