Global stocks were on the fall today as a fresh row between Washington and Beijing over U.S. legislation on Hong Kong threatened to undermine their trade talks and delay a “phase one” deal that investors had initially hoped to be signed by now. European shares were on course to extend their losses with Euro Stoxx 50 down 0.62%, German DAX falling 0.68% and FTSE down 0.48%. MSCI's Asia-Pacific shares which does not include Japan, fell 1.2% to a three-week low, with Hang Seng shedding a concerning 1.6% while Japan's Nikkei dropped 0.4%. Chinese mainland shares dropped 0.3%. S&P500 was down 0.15%, having dropped as much as 0.6% during Asian trade, a day after all three major indexes fell, with the S&P 500 losing 0.38%. In the currency market, the yuan hit three-week lows, trading as low as 7.0450 to the dollar in onshore trade. The dollar was weak against the yen at 108.59 compared to this week's high of 109.07 touched on Monday, while gold held firm at $1,470.2 per ounce. The euro was little changed at $1.1077.
China needs to make better use of its various policy tools to boost the economy, Premier Li Keqiang said, as growth teetered near three-decade lows and a partial trade deal with the United States remained elusive. Monetary policy needs to place more stress on developing the real economy, especially small and medium-sized enterprises, Li told reporters after a roundtable with World Bank and IMF chiefs. He said China will use “efforts through all channels” to lower real interest rates. The loan prime rate, China’s lending benchmark rate, was again lowered yesterday to reduce company funding costs and shore up an economy hurt by slowing demand and U.S. trade tariffs. Growth in the world’s second largest economy slowed more than expected to 6.0% year-on-year in the third quarter, the weakest pace in nearly 30 years and just within its 6-6.5% target.
French shoppers are on course to spend over 100 billion euros online in 2019, a rise of at least 8% on last year, as they splurge some 20 billion euros on web purchases over the Christmas period. French consumers spent 18.3 billion euros online during the festive season alone in 2018, which also encompasses Black Friday sales. Competition has put pressure on traditional retailers to step up their online strategies, spurring growth in the sector. France is one of the leaders in Europe for online grocery shopping. The French economy is still expected to grow only 0.2% in the fourth quarter marking a slowdown from the previous 0.3%, a disappointment to President Macron’s reforms which injected billions of euros in stimulus. The expected yearly growth of 1.3% is still higher than Eurozone’s largest economy, Germany which is currently forecast to grow 0.5% in 2019.
Italy is working on improving the reform of the euro zone bailout fund and is not considering vetoing it at the moment, a government official said, as politicians in the euro zone’s third-largest economy argue over the proposed changes. Prime Minister Giuseppe Conte said on Tuesday that Italy would only approve the reform if it was part of a broad package of reforms and Italian media had written that the government might seek to delay and even veto it. The issue of debt restructuring is particularly sensitive in Italy. Its public debt, at 135% of gross domestic product, is proportionally the highest in the euro zone after Greece’s, and its sustainability is often questioned at times of rising bond yields. The Bank of Italy’s governor Ignazio Visco warned last week that any debt restructuring mechanism could hit market confidence in Italy’s debt, but the bank was not against ESM reform in itself.