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Oil, copper slip as US-China trade row escalates

Oil and copper prices slipped yesterday as the US-China trade dispute escalated while global equity markets traded slightly lower as gains in US technology shares offset declines in commodity and trade-sensitive shares.

The United States and China implemented punitive 25 per cent tariffs on $16 billion worth of each other’s goods, even as mid-level officials from both sides resumed talks in Washington.

The dollar rose after minutes released on Wednesday from the Federal Reserve’s most recent meeting suggest the US central bank is on course for further interest rate hikes.

The minutes showed policy-makers discussed how global trade disputes could batter businesses and households. A prolonged trade war could change expectations for monetary tightening.

A drop in crude prices pushed oil heavyweights lower, with Exxon Mobil leading declining shares in US markets and on MSCI’s gauge of global equity markets, which shed 0.29 per cent.

Oil prices were choppy as traders were tugged lower by the US-Sino trade dispute with receiving some support from a report showing a decline in US commercial crude inventories.

Brent fell 25 cents to $74.53 while US crude rebounded to slid 29 cents to $67.57 per barrel.

“Fears are rife that economic headwinds stemming from an escalation in their trade war will ultimately hurt global oil demand,” said Stephen Brennock, analyst at brokerage PVM Oil Associates.

In London metals markets, benchmark copper fell 0.35 per cent at $5,984 a tonne, paring losses of more than 1 per cent during the session.

China accounts for nearly half of global copper consumption and prices are near their highest in two years as manufacturers have rushed to buy refined metal to avoid import tariffs.

In Europe, the pan-European FTSEurofirst 300 index lost 0.14 per cent while shares on Wall Street trended lower.

The Dow Jones Industrial Average fell 99.88 points, or 0.39 per cent, to 25,633.72. The S&P 500 lost 6.26 points, or 0.22 per cent, to 2,855.56 and the Nasdaq Composite dropped 14.05 points, or 0.18 per cent, to 7,875.05.

The trade-sensitive S&P industrials sector dipped -0.44 per cent, while the technology index rose 0.22 per cent, led by gains in Microsoft and Apple.

United States Treasuries were little changed ahead of a speech by Fed Chairman Jerome Powell on Friday at the annual economic symposium in Jackson Hole, Wyoming.

“Everybody’s on wait-and-see mode for Jackson Hole tomorrow,” said Subadra Rajappa, head of US rates strategy at Societe Generale in New York.

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