G20 rift divides markets


G20 rift divides markets
  1. G20 rift divides markets
    channelnewsasia.com
    World equities wobbled on Monday after G20 finance ministers failed to renew an anti-protectionist pledge, in the face of Donald Trump's "America First"…
    Business

LONDON: World equities wobbled on Monday (Mar 20) after G20 finance ministers failed to renew an anti-protectionist pledge, in the face of Donald Trump's "America First" push.

Much of Asia and Europe also beat a retreat as investors took profits from last week's bumper gains and swapped risky equities for safer assets. Wall Street was mixed in midday trading.

Over the weekend, in an early taste of what Donald Trump's presidency spells for the world, the G20 failed to get Washington to sign off on a pledge to reject protectionism in a closing statement.

Commitments of support to the existing multilateral trade system, including the World Trade Organisation (WTO), were also conspicuously missing from the final communique from the meeting of finance ministers from the G20 group of developed and emerging nations in the German spa town of Baden-Baden.

"The European equity markets started the week on a heavy risk-off sentiment after the G20 communique explicitly reflected the US intentions to establish trade protectionist measures," said London Capital Group analyst Ipek Ozkardeskaya.

The move follows Trump's warnings to throw up levies and revise global agreements he says are unfair to the United States.

'MORE AGGRESSIVE'

Citi analyst Ebrahim Rahbari argued in a note to clients that rising protectionism posed a key risk to the world economy.

"Overall, we continue to think that the new US administration will pursue a more aggressive position on international trade," Rahbari said.

"We see a continuation of the gradual rise in protectionism in recent years and for globalisation to stall, but we see a major rise in protectionism - including the risk of trade wars - as one of the main risks to the global outlook."

In London, the pound took a small hit, initially dropping around half a cent, after the British government announced it would begin the two-year procedure to exit the European Union on Mar 29.

"The news was hardly a surprise - however the reminder that the UK is facing years of difficult and likely hostile trade negotiations seemed to suppress investors' appetite for the currency," said Spreadex financial analyst Connor Campbell.

The drop in the value of the pound helped push up the FTSE…

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