World shares fell for a fifth straight day yesterday, with emerging market stocks in their sixth day of declines, as investors braced for an escalation in a trade war between the United States and China.
The dollar edged down following a bounce in European currencies, though the greenback still received support from concerns about US President Donald Trump imposing further tariffs on Chinese imports.
Emerging market stocks lost 0.29 per cent and were near a 13-month low they hit last month, with these shares confirmed to be in a bear market if the index closes more than 20 per cent below its January 26 high.
A key worry for investors was the end of a public consultation period over trade after which Mr Trump could impose tariffs on an additional $200 billion of Chinese goods. China’s commerce ministry warned the country would retaliate against any new tariff measures.
Mr Trump had said on Wednesday that the US was not yet ready to come to an agreement.
Investors also awaited news from US-Canada talks that were continuing yesterday about revamping the North American Free Trade Agreement. Canada insisted Wednesday there was room to salvage the pact despite few signs a deal was imminent.
The Dow Jones Industrial Average fell 20.5 points, or 0.08 per cent, to 25,954.49, the S&P 500 lost 13.12 points, or 0.45 per cent, to 2,875.48 and the Nasdaq Composite dropped 69.61 points, or 0.87 per cent, to 7,925.57.
The MSCI All-Country World Index, which tracks shares in 47 countries, dropped 0.4 per cent.
The pan-European STOXX 600 index fell 0.4 per cent.
Investors were worried that problems in Argentina, Turkey and South Africa were no longer isolated cases, analysts said.
Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.7 per cent.
The dollar, considered a safe haven in times of turmoil has benefited from the trade conflicts. The dollar index, tracking it against a basket of major currencies, fell 0.06 per cent, with the euro down 0.09 per cent to $1.1619.
Sterling added to Wednesday’s gains as some investors positioned for a favourable Brexit outcome though it was well below the previous session’s high as progress was uncertain. It was last up 0.2 per cent against the dollar.
Emerging markets have been hit by the financial crises in Argentina and Turkey. MSCI’s index of emerging market currencies, which had earlier paused near 16-month lows, was unchanged after two straight days of heavy declines.
US Treasury yields were little changed ahead of today’s highly anticipated jobs report for August.
Oil future sank after US data showed gasoline inventories rose last week, overshadowing a bullish drawdown in crude.
US crude fell 2.01 per cent to $67.34 per barrel and Brent was last at $76.00, down 1.64 per cent.
US gold futures gained 0.25 per cent an ounce.