Skip Header

On 23 May 2019 - Global stock slide deepens as US-China relations deteriorate

Anne D Picker

Anne D Picker - Econoday

US economic data mixed, European data favorable, Asian data soft.

US markets

In the latest heating up of what is being called a technology cold war, US Secretary of State Mike Pompeo rejected claims from Huawei that it is not tied to the Communist Party and the Beijing government. Increased US naval activity in the South China Sea was also reported in the session.

Shares ended off their lows with the Dow down 1.1 percent on the session and also down percent 1.1 percent so far in the week. The Nasdaq fell 1.6 percent in the session and is down 2.4 percent on the week. Demand for the safety of US Treasuries rose sharply while the dollar index slipped slightly. Thursday's economic data were mixed with initial jobless claims remaining low but not as low as the historic levels in April, a comparison that points to an easing of strength, however limited, for the May employment report. New home sales fell more than expected in April but prior months were revised higher and the 3-month average, which is a central measurement for US housing activity, continues to pivot higher much like the average for existing home sales, both of which are getting major boosts from this year's sharp decline in mortgage rates.

Medtronic rose sharply after the medical equipment maker topped earnings estimates, while electronics retailer Best Buy, exposed to US-China tariff actions, fell sharply despite beating earnings estimates. Facing analyst downgrades, Tesla rose as Elon Musk promised better sales growth while Qualcomm continues to fall in the wake of an anti-trust ruling earlier this week that the company charges excessive royalties for its patents and which voided an exclusive supply arrangement with Apple. These data reflect observations at 4:00 PM US ET. Dated Brent spot crude was down US$2.92 to $67.91 while gold was US$10.20 higher at $1,283.80. The US dollar fell against the yen, the Swiss franc, and the euro; it was little changed against the pound and the Australian dollar and firmed against the Canadian dollar and the yuan. The yield on the US Treasury 30-year bond fell 6 basis points to 2.75 percent while the yield on the 10-year note was down a sharp 8 basis points to 2.31 percent.

European markets

Asian sell-off pressure in early trading and a US sell-off in late trading deepened declines in European shares. Both Germany's DAX and France's CAC fell 1.8 percent on the day to bring their weekly losses to 2.9 and 2.3 percent respectively. Italy's MIB fell 2.1 percent Thursday for a weekly loss of 4.6 percent while the FTSE lost 1.4 percent on the session and is down 1.6 percent on the week.

European Parliament elections begin today in some EU countries and will run through Sunday for the rest. Investor concerns about a possible sharp swing in favor of anti-EU parties mean that the results could have much more significant implications for the euro than has been the case in the past. The inaugural session of the newly-elected is scheduled for July 2. In the UK, Theresa May has pushed back a new Parliament vote on Brexit until next month as pressure on the prime minister continues to build for her resignation. Yesterday, Brexit supporter Andrea Leadsom resigned from the government.

Losses in the stock market came despite mostly favorable economic data in the session. Details of Germany's first-quarter GDP performance were surprisingly firm with both household consumption and capital formation rising solidly and net foreign trade, boosted by exports, also strong. The country's composite flash PMI for May, boosted by services, rose slightly to 52.4 though manufacturing slipped slightly and deeper into contraction at 44.3. The flash PMI composite for France also did better than expected with manufacturing rising to 50.6 and, in a separate report out of France, the business climate indicator also coming in strong and benefiting from a bounce higher in orders. Deutsche Bank fell sharply after chief Christian Sewing talked of "tough cutbacks" which are expected to be focused in the bank's investment banking business. Shares of Commerzbank and Daimler, both trading ex-dividend, fell in the session.

Asia Pacific Markets

The US-China trade war hit Asian markets again Thursday as traders reacted to reported widening US sanctions on Chinese tech firms, and expected Chinese retaliation. The Shanghai composite fell 1.4 percent to a three-month closing low amid fallout from a report the US would bar US suppliers from selling to Chinese surveillance firm Hikvision. Previous US action against telecom giant Huawei continued to reverberate across Asian markets as the firm and its many suppliers dropped again. The Hong Kong Hang Seng fell 1.6 percent, with tech shares off 4 percent.

Other major Asian markets fell less sharply but sentiment was poor. Japan's Nikkei 225 was off 0.6 percent, with tech shares hit by Huawei worries. Investor SoftBank was a notable loser, down about 5 percent, on reported US regulatory trouble with the T-Mobile-Sprint merger. SoftBank owns a stake in Sprint. The Singapore Straits Times index fell 0.7 percent, led by losses in financials and property shares. The Korean KOSPI eased by 0.3 percent, mostly on Huawei fallout. Australia's All Ordinaries fell 0.2 percent amid profit-taking after six straight days of gains. Financials, mining, and energy all fell about 1 percent. India's BSE Sensex relinquished early strong gains to end down 0.8 percent, as many traders took profits following a huge rally as India's election results were confirmed.

In economic news, Japan's flash manufacturing PMI index eased to 49.6 in May from 50.2 in April. Respondents cited renewed US-China trade tensions and the upcoming sales tax increase as factors weighing on activity and sentiment. Output and new orders fell for a fifth consecutive month and at a faster pace than in April, while new export orders also fell again but at a slower pace. Singapore's headline consumer price index advanced 0.8 percent on the year in April, up from 0.6 percent in March, and fell 0.3 percent on the month after decreasing 0.1 percent previously. The Monetary Authority of Singapore's preferred measure of core inflation, which excludes the cost of accommodation and private road transport, increased 1.3 on the year in April, easing from 1.4 percent in March, and rose 0.1 percent on the month after dropping 0.2 percent previously. Officials at the Monetary Authority of Singapore retained their assessment that price pressures are likely to remain subdued over the rest of the year.

Looking forward

Merchandise trade data out of New Zealand and the CPI out of Japan will be posted Friday as will Singapore industrial production. UK retail sales and CBI distributive trades also out of the UK will be reported in Europe with durable goods orders leading the US session.

Global Stock Markets



23 May 2019

Daily Change

% Change Daily

North America





United States











S&P 500





S&P/TSX Comp










FTSE 100




















Ibex 35





OMX Stockholm 30















All Ordinaries





Nikkei 225









Hong Kong

Hang Seng




S. Korea











Shanghai Comp










Sensex 30




*Markets closed




Data Source  — Haver Analytics




Note: all releases are listed in local time.

Important Information

Econoday Inc. is a US company that provides financial commentary and indicators to industry professionals. All information provided and views expressed are those of Econoday. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Past performance is not a reliable indicator of future results. The value of investments can go down as well as up and investors may not get back the amount invested.