New York (AFP)
Wall Street indexes at half-mast, oil drop and borrowing rate sharply lower: in the United States the financial markets were strongly disrupted Thursday by the trade war and its potential consequences on the economy.
The index index of the New York Stock Exchange, the Dow Jones Industrial Average, declined in the mid-session at 16:00 GMT 1.53% to 25,381.25 points.
The benchmark oil barrel in the United States, the WTI, plunged 5.03 percent to 58.31 dollars, while the Brent, London-listed, lost 4.50 percent to 67.80 dollars.
And, a sign of investors' appetite for assets deemed less risky, the 10-year US debt rate fell to 2.315%, its lowest level since the end of 2017.
Investors are increasingly worried about rising Sino-US tensions, which are currently crystallizing around the Chinese telecom giant Huawei placed last week by Washington on a list of suspicious companies.
While the world number two smartphone is gradually dropped by its trading partners, China denounced Thursday a "harassment" from the United States and announced to have sent "a solemn protest" in Washington. US Foreign Minister Mike Pompeo has accused Huawei of lying about his true ties to the Chinese authorities.
"The risk is that both sides remain stubborn and that trade tensions extend beyond 2019," commented Art Hogan, National Investment Company.
The International Monetary Fund on Thursday also issued a serious warning to the United States and China, saying that their standoff could jeopardize the global economic rebound expected for the second half of 2019.
US statistics confirmed Thursday this hypothesis: according to the first estimate of the Composite PMI Composite Markit published Thursday, growth in private activity has slowed sharply in May at 50.9 points, its lowest level in three years.
The index measuring manufacturing output, at 50.6 points, has even dropped to its lowest level since 2009.
"For once, investors are not only reacting to tweets and noise on business negotiations," commented Gregori Volokhine, portfolio manager for Meeschaert Financial Services. "These cool indices are the first sign that we may be approaching a point of inflection on US growth."
If the PMI falls below the 50-point threshold, it means that the activity falls back.
The markets are also sensitive, according to Volokhine, to the fact that President Donald Trump urged Wednesday the Democrats of Congress to stop their "bogus investigations" after cutting short a meeting supposed to cover a vast infrastructure program.
"It was a matter of understanding between Democrats and Republicans.If it is no longer possible to collaborate between the executive and the legislature, it will be difficult to negotiate topics as important to the economy as the debt ceiling or the budget, "he noted.
? 2019 AFP