World Economy
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Global Shares Mixed

Rising US borrowing costs have rattled markets globally because of worries they will hurt demand
Japan’s Nikkei slipped after data showed the country’s economy contracted in the first quarter for the first time since late 2015.Japan’s Nikkei slipped after data showed the country’s economy contracted in the first quarter for the first time since late 2015.

World share prices were mixed Wednesday, with European benchmarks posting modest gains after a day of losses in most major Asian markets. China-US trade talks, North Korea’s cancellation of meetings with South Korea and weaker than expected Japanese economic growth weighed on sentiment.

Germany’s DAX added 0.2% to 12,992.35 and the CAC 40 of France edged 0.1% higher to 5,559.51. Britain’s FTSE 100 rose 0.2% to 7,739.10. The future for the S&P 500 climbed 0.1% to 2,712.40 and the future for the Dow also gained 0.1% to 24,687.00, pointing to early gains on Wall Street, AP reported.

The Dow Jones Industrial Average slipped 193 points, or 0.78%, to 24,706.41 on Tuesday, returning to negative territory for the year. The S&P 500 fell 18.68 points to 2,711.45. The Nasdaq Composite was down 59.69 points, or 0.81%, at 7,351.63.

Italian stocks fell on Wednesday after reports that two parties seeking to form Italy’s next government could seek debt forgiveness, although broader markets were unfazed and focused instead on a pause in surging US bond yields.

Rising US borrowing costs have rattled markets globally because of worries they will hurt global demand, but with the dollar flat and treasury yields off their recent highs on Wednesday, most European stock markets opened higher. Italian stocks fell o.5%, while the pan-European STOXX 600 rose 0.16%.

Eurozone banks slid 0.51%, although they pulled back from earlier larger losses after a League spokesman said the request for cancellation of the debt was never in the official draft of the government program.

 Asia Closes Flat

Japan’s Nikkei 225 stock index lost 0.4% to 22,712.23 and the Kospi in South Korea edged less than 0.1% higher to 2,459.82. Hong Kong’s Hang Seng slipped 0.1% to 31,110.20, but the S&P ASX 200 added 0.2% to 6,107.00. The Shanghai Composite index dropped 0.7% to 3,169.57 and shares in Southeast Asia were mixed.

Japan’s Nikkei slipped after data showed the country’s economy contracted in the first quarter for the first time since late 2015, snapping the longest stretch of economic growth in 28 years. The economy shrank 0.6%, government data said, thanks largely to weak private consumption and business investment.

Banking, metals and energy stocks led the declines, with shares of Mitsubishi UFJ Financial Group dropping 2%.

“Trade friction between the U.S. and other major countries ... including China, and prolonged negotiations could weigh on demand for Japanese machinery and electric parts and devices, and delay the recovery in exports,” Nobumasa Takeuchi of IHS Markit said in a commentary.

Australian stocks rose slightly, with banking and energy shares leading the way. New Zealand’s benchmark S&P/NZX 50 index slumped 1.8%, hurt by a 14% tumble for a2 Milk Co. Ltd., which missed forecasts and guided lower on revenue.

 Trade, Energy

As the Trump administration resumes talks in Washington with senior Chinese officials seeking to ward off a trade war between the world’s two biggest economies, American companies were seeking relief from tariffs the president has threatened to impose on at least $50 billion in Chinese goods.

“Trade friction between the US and other major countries, including China, and prolonged negotiations could weigh on demand for Japanese machinery and electric parts and devices, and delay the recovery in exports,” Nobumasa Takeuchi of IHS Markit said in a commentary.

Benchmark US crude oil gave up 27 cents to $71.04 per barrel in electronic trading on the New York Mercantile Exchange. On Monday it rose 35 cents to settle at $71.31 a barrel. Brent crude, used to price international oil, shed 49 cents to $77.94 a barrel in London.

 Currency Market

In currency markets, the dollar paused below five-month highs reached on Tuesday after economic data out of the United States pushed bond yields and demand for the greenback higher.

The US currency has enjoyed a blistering rally in recent weeks as investors focus on a Federal Reserve raising interest rates while central banks elsewhere push back policy tightening.

Strong US retail sales and factory data on Tuesday pushed the US 10-year yield through a key level to hit 3.095%, its highest since July 2011, raising worries about higher borrowing costs for companies worldwide.

The dollar fell to 110.21 yen from 110.36 yen late Tuesday. The euro weakened to $1.183 from $1.1839.

 

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