US stock markets have followed European and Asian equities lower, which dropped after US president Donald Trump ratcheted up trade pressures on Beijing.
Mr Trump on Wednesday instructed his trade tsar to consider raising the proposed tariffs on $200bn worth of annual imports from China to 25 per cent from the 10 per cent announced last month.
Meanwhile, the Bank of England’s Monetary Policy Committee has voted to raise interest rates to 0.75 per cent, as markets expected. However, sterling fell during the press conference from Mark Carney, the bank’s governor, and other MPC members. Sterling was down 0.5 per cent versus the dollar to $1.3057, and off 0.2 per cent against the euro at €1.1227.
On Wall Street, the S&P 500 is down 0.5 per cent at 2,800, while the Nasdaq Composite is 0.5 per cent lower at 7,667.
Following falls in Asia-Pacific stock markets, here is the state of play in Europe
Frankfurt’s Dax Xetra is 1.6 per cent lower
London’s FTSE 100 is off 1.2 per cent
The pan-European Stoxx 600 is down 0.9 per cent
Investors reacted to the latest tariff suggestion from the White House during overnight trading in Asia. Hong Kong’s Hang Seng was among the worst performers, down 2.2 per cent and hitting its lowest intraday level in 10 months.
Mainland Chinese stocks also fell, with the CSI 300 index of Shanghai and Shenzhen stocks down 2.8 per cent to a one-month low. South Korea’s Kospi fell 1.5 per cent and Japan’s Topix lost 1 per cent, with the energy sector dropping 1.6 per cent after oil prices fell overnight following an unexpected increase in US crude stockpiles.
Fixed income
Japanese government bonds remain volatile following sharp moves in the previous sessions. The yield on 10-year Japanese government bonds rose as much as 2 basis points to an 18-month high of 0.145 per cent before pulling back to 0.12 per cent flat on the day.
The yield on the 10-year US Treasury is steady at 3 per cent after rising above that level on Wednesday for the first time since mid-June.
Forex
The dollar index is up 0.3 per cent after the US Federal Reserve decided, as expected, to leave interest rates unchanged on Wednesday. The US currency is 0.3 per cent weaker versus the yen at ¥111.42.
Commodities
Brent crude is down 0.5 per cent at $72.06 a barrel, while West Texas Intermediate is flat at $67.63 a barrel. Figures from the US Energy Information Administration on Wednesday showed crude inventories climbed 3.8m barrels in the week to July 27, confounding expectations for a fall of 2.8m barrels.
Gold is up $1 at $1,216 an ounce after closing at its lowest point in more than a year on Wednesday.
Barclays: Staley struggle
Chief executive has delivered just enough to smile politely at the next activist
Shareholder activists tend to get short shrift at the big banks. From time to time they show up with a small stake and a few ideas about returning more cash, which executives will hear out. But the minute they’re out the door it’s back to business. What does that guy know about running a sprawling global institution where every move you make, every cent of capital you pay out, needs to be cleared by a whole host of regulators?
Edward Bramson of Sherborne Investors, an activist who bought 5 per cent of Barclays earlier this year, has not caused a great fuss so far. He has not appeared on CNBC to rubbish the British bank’s management, nor posted any PowerPoint presentations to the web, setting out exactly what the chief executive needs to do.
But there was a strong subtext to Barclays’ first-half results on Tuesday: we are doing just fine without you. “Let it run” was the refrain of the chief executive, Jes Staley, who since December 2015 has tried to mould Barclays into a transatlantic bank spanning consumer and wholesale businesses.
To say that Mr Staley has nailed it would be wrong. Barclays’ annualised return on equity was a deeply inadequate 2.6 per cent over the first half, hit by a $2bn settlement with the US government, among other one-offs.
At the same time, it is clear that two or three years of any big-bank turnround is not long enough. James Gorman needed eight years at Morgan Stanley to deliver decent profits. Bank of America and Citigroup, which last switched chief executives in 2010 and 2012, are still barely posting double-digit ROEs despite big boosts from lower taxes.
As for Mr Staley, he has wrung a couple of better quarters from the investment banking division, which has done particularly well in risky areas such as leveraged finance. He has strengthened the balance sheet, even borrowing the word “fortress” from his old JPMorgan mentor, Jamie Dimon. And he has shrugged off regulators’ concerns about his own fitness for the role. He has delivered just enough, in other words, to smile politely at the next activist, then get on with the (very big) job at hand.
