The rout in emerging markets continued this week, with China bearing the brunt. Shanghai-listed shares fell past a two-year low, and both the Shenzhen and Hong Kong markets were also weaker.
Meanwhile, emerging-market currencies fell to a collective 10-year low at the start of the week. The decline in the Chinese yuan was arrested on Tuesday, however, after the governor of the People’s Bank of China said that the central bank would look to keep the currency “generally stable”.
The immediate cause of all this turmoil was the looming deadline for the imposition of US tariffs on $34 billion worth of Chinese goods. The US said the 25% tariffs would come into effect on Friday. China promised to retaliate immediately, with Beijing poised to cancel imports of soybeans from the US.
According to the US Department of Agriculture, around 1.1 million metric tons of soybeans are scheduled for delivery before the end of August. Cancellation of these orders will have a considerable impact on US farmers in states such as Iowa, Ohio and Missouri. Accordingly, John Kasich, the Republican governor of Ohio, said that President Trump’s trade war “is beginning with a shot in the foot”. The move would also hurt China, which could face a shortage in soybeans towards the end of the year.
In the US, the S&P 500 performed well in a week curtailed by the Independence Day holiday. The index finished up 0.67% by Thursday’s close. Although there were some jitters along the way, investors took heart from some strong economic data and from reports that the Trump administration might abandon the imposition of tariffs on European cars.
With technology stocks appearing impervious to the global tensions, this was a good week for the Nasdaq. One notable performer was online craft marketplace Etsy, which appears to have turned its fortunes around in recent months. Many had expected the company to fall prey to Amazon. But Etsy’s focus on handmade and vintage goods is helping it carve out a distinct niche, and it has cut costs and raised fees. Its shares hit an all-time high this week.
One Nasdaq stock to endure a rougher ride was Tesla. The driverless-car company announced that it had succeeded in reaching its production target of 5,000 Model 3s, but continued doubts about the safety of its vehicles and the sustainability of production drove its share price down over the week.
After opening the week with a heavy fall, UK shares mounted a slight recovery, helped by some good economic data. This was offset, however, by further uncertainty over the process of leaving the European Union. During the week, the British Chamber of Commerce warned that many companies were becoming frustrated with the lack of progress in the Brexit negotiations. The FTSE 100 was down 0.44% by Thursday’s close.
The European market showed signs of life towards the end of the week, when investors were encouraged by the reports that the US would scrap its proposed tariffs on European cars. Overall, the FTSE World Europe ex UK index was up 0.77% by the end of Thursday.
And finally …
Given its associations with bear, moose and beaver, Canada might not strike you as the snakiest of places. So imagine the surprise of Carol Benedict, who was doing her shopping in the New Minas Superstore in Nova Scotia at the weekend when the man behind her screamed that there was a snake on his cart.
Mrs Benedict looked down to see a “quite long” reptile uncoil from the cart of the man next to her, just inches from her leg. Displaying admirable presence of mind, she managed to snap a couple of photos of the ophidian opportunist, which have since gone viral on the internet.
Staff at the New Minas store managed to remove the serpentine stowaway from the cart. It turned out to be a garter snake – only mildly venomous and no danger to anything larger than a newt.
Mrs Benedict described herself as “not quite a snake fan”. Shawn Pineo, on whose cart the snake hitched a ride, was less reserved. “I probably squealed like a little girl,” he said.
Editorial image credit: Visual China Group / Getty Images