London, May 13: World stocks sank Monday in reaction to new eruptions in the US-China trade war, while oil rallied on simmering tensions in the crude-rich Middle East.
In cryptocurrency deals, bitcoin rebounded back above $7,000 for the first time since September.
Equity investors began the day in underwhelming fashion in Asia, as the lack of a US-China trade deal jarred markets.
Negative sentiment spilled over into Europe on the back of the latest developments in the trade war between the world's top two economies.
Negotiations in Washington ended Friday without agreement and a massive US tariff hike on Chinese imports kicked in.
Then on Monday, President Donald Trump told China via Twitter not to retaliate, a warning ignored by Beijing where the government announced tariffs on $60 billion worth of US goods from June 1.
– 'Nowhere near' –
“Judging by Trump's tweets alone, the two nations are apparently nowhere near signing a trade deal,” said Fawas Razaqzada, a market analyst at Forex.com.
“And for the markets, this is all that matters right now. Thus, for sentiment to improve again, Trump's tone towards China will need to improve first and foremost,” he said.
At the opening bell in New York, Wall Street's Dow index fell more than 400 points, while eurozone stock markets were as much as 1.5 percent lower by that time, with London doing a little better.
Markets remain on red alert over a trade war between the two big superpowers that observers warn could shatter global economic growth — and also hurt demand for commodities like oil.
– 'Groundhog Day' –
“It's Groundhog Day yet again, with yet another day of US-China focused selling taking hold,” said senior market analyst Joshua Mahony at trading firm IG.
White House economic advisor Larry Kudlow said Trump and China's Xi Jinping could meet next month on the sidelines of the G20 summit to hash out their differences on trade — but no new talks are yet scheduled.
Trump had accused Beijing of reneging on its commitments and ordered new punitive duties — which took effect Friday — on $200 billion worth of Chinese imports, raising them to 25 percent from 10 percent.
He then ordered a tariff hike on almost all remaining imports from China, which are worth about $300 billion, according to US Trade Representative Robert Lighthizer.
– Bitcoin mystery –
Some assets, like gold and some government bonds, have been doing well from the trade turmoil as investors ditch risky investments like stocks in a flight to safety.
On Monday, some analysts were wondering whether cryptocurrency bitcoin should be added to the list after rising by $1,000 over the weekend to 9-month high.
Calling the surge “a mystery to investors”, FXTM research analyst Lukman Otunuga observed “the coincidental view” that bitcoin's price rose at the same time as US-China trade tensions.
“While it's far too premature to suggest that bitcoin has restored itself as a potential safe-haven asset for investors, the idea will attempt to pick up further momentum if the cryptocurrency continues to explode higher amid the risk-off conditions,” Otunuga said.
– Mideast oil tensions –
Oil prices charged higher Monday as simmering tensions in the crude-rich Middle East eclipsed worries over the global demand outlook.
Saudi Arabia said Monday that two of its oil tankers were damaged in mysterious “sabotage attacks” in the Gulf, as tensions soared in a region already shaken by a standoff between the United States and Iran.
Riyadh, Tehran's regional arch-rival, condemned “the acts of sabotage which targeted commercial and civilian vessels near the territorial waters of the United Arab Emirates”, a foreign ministry source said.
The global oil market won support “on dealer concerns about supply disruptions in the Middle East and this despite market worries over global growth prospects”, noted Oanda analyst Dean Popplewell.
Saudi Arabia is the most influential member of the Organization of the Petroleum Exporting Countries (OPEC) oil exporters' cartel, with Iran in second place.
– Key figures around 1335 GMT –
- London – FTSE 100: DOWN 0.5 percent at 7,165.43 points
- Frankfurt – DAX 30: DOWN 1.5 percent at 11,874.67
- Paris – CAC 40: DOWN 1.3 percent at 5,259.63
- EURO STOXX 50: DOWN 1.2 percent at 3,319.63
- New York – Dow: DOWN 1.7 percent at 25,497.06
- Oil – Brent Crude: UP $1.83 at $72.45 per barrel
- Oil – West Texas Intermediate: UP $1.51 at $63.18
- Tokyo – Nikkei 225: DOWN 0.7 percent at 21,191.28 (close)
- Shanghai – Composite: DOWN 1.2 percent at 2,903.71 (close)
- Hong Kong – Hang Seng: closed for a public holiday
- Euro/dollar: UP at $1.1260 from $1.1233 at 2100 GMT
- Pound/dollar: UP at $1.3034 from $1.2998
- Dollar/yen: DOWN at 109.12 yen from 109.95 yen