HONG KONG – World stocks sank Friday as jitters over the crises in Iraq and Ukraine escalated, but Chinese stocks rose after surprisingly strong growth in exports.
KEEPING SCORE: Futures augured a down session on Wall Street. Dow futures were down 0.4 per cent at 16,260 and S&P 500 futures lost 0.4 per cent to 1,896.80. European shares were down but trimmed their opening losses. Germany’s DAX shed 0.8 per cent to 8,970.34 and France’s CAC 40 dropped 0.3 per cent to 4,138.15. London’s FTSE 100 retreated 0.6 per cent to 6,560.98.
ASIA’S DAY: Japan’s Nikkei 225 led Asian declines, sliding 3 per cent to 14,778.37 as the yen strengthened. South Korea’s Kospi lost 1.1 per cent to 2,031.10 and Hong Kong’s Hang Seng shed 0.2 per cent to 24,331.41. In mainland China, the Shanghai Composite Index climbed 0.3 per cent to 2,194.42. Australia’s S&P/ASX 200 fell 1.3 per cent to 5,435.30. Markets in India and Southeast Asia fell.
GEOPOLITICS: Investors fretted about the effect of Russia’s decision to retaliate against sanctions over the Ukraine crisis with a ban on food imports from the West. Meanwhile, President Barack Obama authorized U.S. airstrikes in northern Iraq, warning they would be launched to defend American troops and civilians under siege from Islamic State militants. Japanese stocks declined as the geopolitical tensions spurred buying in the yen, seen as a safe haven currency. A stronger yen makes Japanese stocks pricier for overseas investors.
THE QUOTE: Russia’s food ban is a “negative for world markets,” said Ric Spooner, chief analyst at CMC Markets in Sydney. He said the ban would “have the knock on effect of driving down prices in other markets as exporters seek to find new outlets for produce that may otherwise have been sold to Russia.”
CHINA DATA: In the latest update on the state of the world’s No. 2 economy, China released July trade figures that showed exports jumped 14.5 per cent in July compared with a year earlier. The figure was a surprise for economists, most of who were predicting that the figure would be lower than the 7.2 per cent growth recorded in June. China’s vast manufacturing industry is a key part of the overall economy, which rebounded slightly in the most recent quarter after slowing in the first quarter. July imports, however, showed signs of weakness.
ENERGY: Benchmark U.S. crude oil for September delivery added 57 cents to $97.92 a barrel in electronic trading on the New York Mercantile Exchange, with the rise suggesting jitters about possible disruptions to supplies from Iraq and Russia. The contract rose 42 cents to settle at $97.34 on Thursday. Brent crude, which is used to price oil sold internationally, added 90 cents to $106.35 in London.
CURRENCIES: The euro rose to $1.3387 from $1.3361 in late trading Thursday. The dollar fell to 101.78 yen from 102.11 yen.