LONDON (Reuters) - World stocks fell and the dollar strengthened on Wednesday due to fears of an imminent escalation in the U.S.-China tariff war, although strong corporate earnings eased investor concerns about a recent sell-off in the tech sector.
FILE PHOTO: A trader sits in front of the computer screens at his desk at the Frankfurt stock exchange, Germany, June 29, 2015. REUTERS/Ralph Orlowski/File Photo
Solid earnings and better-than-expected economic data looked poised to lift European shares on Wednesday but the Stoxx 600 declined, dragged down by autos and miners, as tensions over trade rose again between the world’s two largest economies.
The United States is reportedly considering more than doubling its planned tariffs on $200 billion of Chinese imports to pressure Beijing into making trade concessions.
This came just hours after European stocks were cheered by a report that the United States and China were seeking to resume trade talks to defuse a battle over import tariffs.
Renewed concern about what a full-blown conflict would mean for China and the global economy weighed on Chinese shares, the offshore yuan and the Australian dollar.
Wednesday’s reaction remained fairly muted, however, as investors turned their attention to central bank decisions.
“Maybe the market is underestimating the economic impacts of the tariffs and that is why it is keeping calm,” said Thu Lan Nguyen, a currencies strategist at Commerzbank in Frankfurt.
The U.S. Federal Reserve concludes its policy meeting on Wednesday and markets are preparing for the Fed policy statement for signs of whether the expected two rate hikes for the remainder of 2018 can be cemented into pricing.
“Buying sentiment towards the dollar could receive a boost if the central bank strikes a hawkish tone,” Lukman Otunuga, research analyst at FXTM, wrote
