World stocks under pressure from trade war fears

LONDON — Europe's stock markets slid on Tuesday as trade war fears and technology sector woes took their toll, while Wall Street managed small gains after a massive sell-off the previous day.

The very partial rebound in American stocks, sparked by bargain-hunting, helped European bourses off their worst levels, traders said.

"US stocks are higher in early action, coming off a sharp drop yesterday that came courtesy of festering global trade war concerns and the persistent weakness in the technology sector", Charles Schwab analysts said.

But the Dow's firmer trend at the opening "pales in comparison to the losses recorded on Monday and reflects ongoing weakness in stocks," warned Craig Erlam at OANDA.

Global equities experienced their worst three months in over two years between January and March, Lukman Otunuga at FXTM noted.

Worst April since depression 

"Retaliatory tariffs announced by China resulted in stocks suffering their worst start to April since the great depression," he said.

All three major European markets were shut on Friday and Monday, as investors enjoyed a four-day holiday weekend.

Despite Tuesday's weakness, European markets still did much better than Wall Street's combined Monday and Tuesday performance, said Jasper Lawler at the London Capital Group.

"Europe is out of the firing line for Trump's tariffs for now and has a lower weighting in technology companies compared to the US," he said. "Both factors make Europe a relative haven from the current negative news flow."

Asian stock markets, which also traded on Monday, ended mixed, as fears of a trade war between the United States and China loomed large.

 Value-sapping trade war

"There was no real letup this Tuesday, the European indices continuing to play catch-up with Monday's value-sapping trade war developments," said Spreadex analyst Connor Campbell.

Wall Street had plunged around two per cent on Monday after China slapped tariffs on 128 US exports worth $3 billion including fruit and pork.

The Dow tumbled 1.9 per cent, the broad-based S&P 500 2.2 per cent and the tech-heavy Nasdaq 2.7 per cent.

China's action — the latest tit-for-tat over US President Donald Trump's duties on steel and aluminium — followed weeks of rhetoric that has raised fears of a trade war between the world's two biggest economies.

Overall, Asian stock market losses were not as bad as first feared at the open, with stocks across the region clawing back ground later in the session.

"The impact from the US market turned out not to be so bad as to incite terror here thanks to lingering hopes that tensions may ease in the weeks to come,” noted Makoto Sengoku, market analyst at Tokai Tokyo Research Institute.