Asian and European stocks mostly slid yesterday, as investors eyed China-US trade talks and the Brexit saga, before the US Federal Reserve’s interest rate call.
In Europe, Frankfurt fell the heaviest with Bayer shares tumbling after a US jury ruled its weedkiller Roundup was a “substantial factor” in a gardener’s cancer.
The Federal Reserve’s March policy meeting concluded yesterday with analysts predicting it was set to announce a slower pace of interest rate hikes as the world’s biggest economy shows signs of softening amid trade tensions.
General optimism about the outlook for the tariffs negotiations has helped propel equities higher across the world this year ‒ offsetting concerns about the outlook for the global economy.
But dealers have been spooked by a report that some US officials are feeling some pushback from China on a number of demands, including on the crucial issue of intellectual property.
The unnamed negotiators said the Chinese side was growing concerned at the lack of assurances that US duties would be removed, according to the Bloomberg story.
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will return to Beijing next week to resume talks.
Adding to unease on trading floors is continued uncertainty surrounding Britain’s drawn-out departure from the EU. Prime Minister Theresa May was reported to have asked the bloc for an extension of the March 29 deadline for leaving, having seen her exit proposals killed off by MPs.
The pound wobbled against the euro and dollar in the absence of fresh developments.
Observers expect the exit date to be put back but there is a concern that it could be rejected, leaving Britain to crash out of the EU without a deal.
Frankfurt stocks, meanwhile, sank 1.3 per cent as the threat to German giant Bayer and its subsidiary Monsanto from US litigation swelled.
A wave of lawsuits has put pressure on Bayer since its $63-billion takeover of Monsanto last year, spooking investors who worry damages payouts could escalate if the firm fails to convince courts its product is safe.
Markets shuddered after a federal court finding Tuesday that Roundup was behind the non-Hodgkin’s lymphoma suffered by 70-year-old Edwin Hardeman, who used the product for decades on the garden at his California home.
“Bayer shares have sold-off sharply after a US jury found that the company’s weed killer, Roundup, caused cancer,” said CMC Markets analyst David Madden.
The news sent Bayer shares nosediving 12.2 per cent to €61.20.