“Stocks Retreat on Trade Concern as Oil Gets a Lift: Markets Wrap.”
Stocks retreated globally as concern grew over the escalating protectionist standoff between China and the U.S. Oil rose before a key OPEC meeting this week, while Treasuries gained and the dollar steadied.
U.S. stocks extended a broad selloff as the Stoxx Europe 600 Index headed for its biggest two-day decline since March. Japan’s Topix Index fell the most in almost three weeks as the yen edged higher. Crude futures climbed as producers were said to discuss a smaller-than-expected boost to production. U.S. 10-year yields approached the lowest level this month.
Global trade is firmly back at the top of the agenda, with investors fretting about the intensifying confrontation between the U.S. and China. The Asian nation swiftly responded after President Donald Trump slapped tariffs on $50 billion of imports late last week, putting an additional 25 percent levy on $34 billion of American agricultural and auto exports starting July 6.
“Tariffs are coming, and you need to pay very, very careful attention to the impact it’s going to have on your holdings,” Bank of Singapore Chief Investment Officer Johan Jooste told Bloomberg Television. “There are too many unknowns right now to be terribly specific. The thing you do know is risk is higher. The market will take something of a cautionary stance.”
Meanwhile in Europe, German Chancellor Angela Merkel and British Prime Minister Theresa May both face crunch weeks over migration and Brexit, respectively. The euro fluctuated between gains and losses and the pound weakened.
“China’s tariffs on U.S. oil would disrupt $1 billion monthly business.”
China’s threat to impose duties on U.S. oil imports will hit a business that has soared in the last two years, and which is now worth almost $1 billion per month.
In an escalating spat over the United States’ trade deficit with most of its major trading partners, including China, U.S. President Donald Trump said last week he was pushing ahead with hefty tariffs on $50 billion of Chinese imports, starting on July 6.
China said Friday it would retaliate by slapping duties on several American commodities, including oil. Investors expect the spat to come at the expense of U.S. oil firms, pulling down the share prices of ExxonMobil and Chevron by 1 to 2 percent since Friday, while U.S. crude oil prices fell by around 5 percent.
“This escalation of the trade war is dangerous for oil prices,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore. “Let’s hope cooler heads prevail, but I’m not overly optimistic,” he added.
Following a year and a half of voluntary supply cuts led by the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC), as well as the non-OPEC producer Russia, oil markets have tightened, pushing up prices.
The potential drop-off in American oil exports to China would benefit other producers, especially from OPEC and Russia. The OPEC kingpin Saudi Arabia and Russia indicated on Friday they would loosen their supply restraint and were starting to raise exports.
“Audi chief Rupert Stadler arrested in diesel emissions probe.”
The chief executive of German carmaker Audi, Rupert Stadler, has been arrested in connection with an investigation into the diesel emissions scandal. A spokesman for Volkswagen, which owns Audi, confirmed he was being held. Munich prosecutors said they had acted because of a risk that Mr Stadler might seek to suppress evidence.
The scandal erupted three years ago, when it emerged that cars had been fitted with devices designed to cheat emissions tests. The devices were initially found in VW’s cars, but its Audi subsidiary has also been embroiled in the scandal. Last month, it admitted that another 60,000 A6 and A7 models with diesel engines have emission software issues. That is on top of the 850,000 recalled last year by Audi, of which only some have been found to require modification.
Munich prosecutors said Mr Stadler would be questioned by Wednesday, once he had spoken to his lawyers. The so-called dieselgate emissions scandal first came to light in September 2015.
Volkswagen admitted that nearly 600,000 cars sold in the US were fitted with «defeat devices» designed to circumvent emissions tests. The carmaker said it had installed software in 11 million diesel cars worldwide that could tell when they were being tested and cut their emissions.
On the open road, untested, the level of emissions would in practice be far higher – up to 40 times as bad as recorded under laboratory conditions.
“Climate Change May Already Be Hitting the Housing Market.”
Even as President Donald Trump downplays the importance of climate change, there are signs that Americans may be taking it more seriously—at least when it comes to buying a house.
Between 2007 and 2017, average home prices in areas facing the lowest risk of flooding, hurricanes and wildfires have far outpaced those with the greatest risk, according to figures compiled for Bloomberg News by Attom Data Solutions, a curator of national property data. Homes in areas most exposed to flood and hurricane risk were worth less last year, on average, than a decade earlier.
Attom Data looked at the annual change in home prices and sales across 3,397 cities around the country, then divided those cities into five groups based on their exposure to various types of natural disasters. What they found suggests the threats of climate change are beginning to register.
On average, home prices across the cities analyzed by Attom Data increased 7.3 percent between 2007 and 2017. That figure masks deep drops in vulnerable areas.
“Natural disaster risk is certainly not the only factor consumers are considering when buying a home,” said Daren Blomquist, Attom Data’s senior vice president for communications. But he said the figures provide “some evidence real estate consumers are responding to natural disaster risk, albeit somewhat erratically.”
The data suggest the relationship between climate risk and home prices isn’t always a straight line. That’s because home buyers have to weigh the risk of disasters against the so-called amenity value of living near water or at the edge of the forest, according to Carolyn Kousky, director for policy research for the Risk Management and Decision Processes Center at the Wharton School.