Shares wounded by trade war, pound hit by Brexit fear without trade By Reuters
By Hideyuki Sano
TOKYO (Reuters) – Global stocks were hit by trade frictions in the US and China on Tuesday while the British pound flirted with 2 1/2 year lows when Prime Minister Boris Johnson indicated he could call for elections to stop lawmakers' attempts to stave off a Brexit without a deal.
MSCI's broadest index of equities in Asia and the Pacific off Japan () plunged 0.2% in early trade while Japan's Nikkei () was flat.
US bond yields were little changed in Tuesday trading following a market holiday in the United States on Monday. The 1[ads1]0-year US Treasury bond was flat at 1.506% ().
Global equities are facing headwinds from the tariffs Washington and Beijing hit on each other.
The United States began imposing 15% tariffs on a number of Chinese goods on Sunday and China began imposing new taxes on US crude, the latest escalation in their trade war.
Although US President Donald Trump has said that both sides will still meet for talks later this month, tensions have shown little signs to subside. [19659002] China said on Monday that they have lodged a complaint against the United States with the World Trade Organization over US import tariffs, and have trashed recent customs actions to break the consensus reached by China and US leaders at a meeting in Osaka. [19659002] "We have so many problems around the world, starting with the US-China trade war and Brexit. But investors seem to be used to being exposed to them," said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trus t Asset Management
"Nobody really believes Washington and Beijing will solve the problems. But as long as the US economy continues, stock prices will have limited downside," he said.
United States Production Survey of the Institute for Supply Management (ISM) due at 1400 GMT Tuesday is a major focus for investors. [19659002] Although US manufacturing activity has slowed down in recent months, the ISM's index has so far remained above 50, separating contraction and growth.
In the foreign exchange market, sterling traded at $ 1,2063, little changed so far on Tuesday after falling 0.85% on Monday. The currency was only half a cent above the $ 1/2-year low of $ 1.2015 that hit August 12.
Prime Minister Johnson implicitly warned lawmakers on Monday that he would seek an election if they tied his hands on Brexit, constantly refusing to receive a further delay for Britain's departure from the EU.
Uncertainty about Brexit has already hit the UK economy, with a survey by IHS Markit / CIPS showing that British industry contracted last month with the fastest interest rate in seven years.
The picture is not much better in Europe, and the European Central Bank is much expected to cut interest rates next week to curb strikes and squeeze the euro.
The single currency fell to a two-year low of $ 1.09555 () in trading early Tuesday.
Offshore also fell to a record low of $ 7.1975 per dollar while the Australian dollar fetched $ 0.674545, not far from a ten-year low of $ 0.67755 last month.
Australia of the Reserve Bank of Australia is expected to keep its policy on hold, although many market players expect a rate cut next month.
Argentine bond prices fell to record lows on Monday and official and black market figures diverged after the country introduced capital controls in an effort to prevent a currency route that sharpen the risk of default.
The peso closed 0.88% stronger in official markets, but closed 0.79% weaker in the black market at 63.5 per dollar.
Oil on rice was also plagued by concern for the trade war. U.S. West Texas Intermediate (WTI) crude () lost 0.76% to $ 54.68 a barrel.
