World shares fell yesterday as cars become the latest focus of US protectionism worries.
Markets had plenty to digest including minutes from the latest Fed and ECB meetings, but in Asian and European trading it was US plans to investigate auto imports that caused the biggest moves.
Japan’s Nikkei ended down 1.1 per cent after Nissan, Mazda and Toyota all fell. In Europe, BMW, Daimler and Volkswagen lost between 2.8 to 3.2 per cent.
The broader market also gave up morning gains on reports Deutsche Bank planned to shed at least 7,000 staff and as Wall Street futures went negative.
The worry for economists is that the move could lead to tariffs similar to those imposed on steel and aluminium in March .
US President Donald Trump had also called for “a different structure” in any trade deal with China, fuelling uncertainty over the negotiations. Beijing had fired back, calling the car investigation an abuse of national security clauses.
In the currency markets, Turkey's lira remained the big mover. It weakened as much as 3 per cent, surrendering most of the gains it made the previous evening after the country's central bank jacked up its key interest rate by 300 basis points to prop up the plunging currency.
Investors have sold the lira on concern about the central bank’s ability to tame double-digit inflation, particularly after President Tayyip Erdogan – a self-described “enemy of interest rates” – said he expected to assert more policy control after June 24 elections.
The lira, which initially gained in early trade, weakened to as much as 4.7414 to the dollar from a close of 4.59. It hit a record low of 4.9290 on Wednesday before the central bank move.
The dollar dipped after Federal Reserve meeting minutes on Wednesday indicated its policymakers weren't looking to raise US interest rates too fast, though another rise will be warranted soon if the economy stays on track.
It helped the euro off its recent six-month low even though minutes from the European Central Bank's meeting this month showed more concern about a economic slowdown.
Meanwhile, Italy’s 10-year bond yield fell 5 basis points to 2.36 per cent, pulling back from Wednesday's 14-month highs. The Italian/German 10-year bond yield gap was 7 bps tighter at 183 bps.
That is still well below benchmark 10-year US Treasury yields, which have drifted back to three per cent in recent days.
In commodities markets, US crude was down 1.2 per cent at just under $71 a barrel. Oil prices fell on Wednesday after an unexpected rise in US crude and gasoline inventories.
Brent futures were 1.3 per cent lower at $78.80 a barrel, continuing to move lower after rising above $80 last week for the first time since November 2014.
Gold was slightly higher with spot gold trading at $1,296 per ounce.