World stocks mixed after IMF trims economic outlook

Annabelle Liang, The Associated Press</span>
Published Tuesday, October 9, 2018 5:50AM EDT
Last Updated Tuesday, October 9, 2018 5:56AM EDT

SINGAPORE -- European and Asian markets are mixed after the International Monetary Fund lowered its outlook for the world economy, citing the impact of rising interest rates and trade tensions.

KEEPING SCORE: Germany's DAX lost 0.1 per cent to 11,930.66 while the CAC 40 in France added 0.1 per cent 5,306.00 on Tuesday. Britain's FTSE 100 was less than 0.1 per cent higher at 7,235.58. Wall Street was set for a pessimistic open. Dow futures lost 0.2 per cent to 26,481.00. The broader S&P 500 futures shed 0.3 per cent to 2,885.50.

ASIA'S DAY: Japan's benchmark Nikkei 225 fell 1.3 per cent to 23,469.39. Hong Kong's Hang Seng fell 0.1 per cent to 26,172.91. The Shanghai Composite index recovered its losses by 0.2 per cent to 2,721.01, after tumbling 3.7 per cent on Monday. Australia's S&P/ASX 200 gave up 1.0 per cent to 6,041.10. Stocks rose in Taiwan, Thailand and Indonesia but fell in Singapore. Markets in South Korea were closed for a national holiday.

IMF DOWNGRADE: The International Monetary Fund has revised its outlook for the global economy, citing rising interest rates and growing tensions over trade. It said the global economy will grow 3.7 per cent this year, the same as in 2017 but down from the 3.9 per cent it was forecasting for 2018 in July. The report comes on the eve of the Oct. 12-14 meetings in Bali, Indonesia, of the IMF and its sister lending organization, the World Bank. IMF believes that the Chinese economy will grow by 6.6 per cent this year as previously forecasted. But the fund lowered China's economic outlook for 2019 to 6.2 per cent, which would be the country's slowest growth since 1990.

U.S.-CHINA TALKS: On Monday, U.S. Secretary of State Mike Pompeo said that Washington had a "fundamental disagreement" and "great concerns" about Chinese actions, before a meeting with Chinese Foreign Minister Wang Yi and another senior official in Beijing on Monday. Pompeo said that he was looking forward to discussions, but his polite, edgy tone shone a spotlight on deteriorating U.S.-China relations. The Trump administration has confronted China on its technology policies and territorial claims in the South China Sea, and the countries have raised tariffs on tens of billions of dollars of each other's goods.

ANALYST'S TAKE: The IMF report "should in no way surprise" as the fund's managing director Christine Lagarde warned that trade disputes were weighing on global growth last week, said Chris Weston of Pepperstone Group Limited. "However, this is the first time any recognized body has been prepared to officially recognize the trade tensions and mark down their forecasts and that is a message in itself," he added.

ENERGY: Benchmark U.S. crude added 40 cents to $74.69 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 0.1 per cent to settle at $74.29 per barrel in New York. Brent crude, used to price international oils, rose 62 cents to $84.53 per barrel. It dropped 0.3 per cent to $83.91 per barrel in London.

CURRENCIES: The dollar slipped to 113.18 yen from 113.21 yen on Monday. The euro fell to $1.1475 from $1.1489.

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