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GLOBAL MARKETS-Shares fall after Argentina peso tumble, safe-havens shine

Published 08/13/2019, 09:00 PM
Updated 08/13/2019, 09:10 PM
GLOBAL MARKETS-Shares fall after Argentina peso tumble, safe-havens shine
USD/JPY
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XAU/USD
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HK50
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GC
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CL
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MERV
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CSI300
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MIWD00000PUS
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MIAP00000PUS
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* Hong Kong protests, Argentine peso collapse unsettle
markets
* Europe ensures world shares stay down for third straight
day
Sentiment already weak due to U.S.-China trade war
* Risk-off trades support safe-haven assets

By Marc Jones
LONDON, Aug 13 (Reuters) - Share markets fell for a third
straight day on Tuesday as fears about a drawnout global trade
war, protests in Hong Kong and a crash in Argentina's peso
currency kept investors huddled in bonds, gold, and the Japanese
yen for safety.
If that wasn't enough, Europe's bourses and the euro .EU
were given an additional shove lower by an alarming German
sentiment survey after some heavy falls in China,
Hong Kong, Japan had also whacked down Asia overnight. .SS .T
MSCI's main 47-country world index .MIWD00000PUS has
dropped nearly 4% this month already and with Wall Street
futures pointing to a 0.2% start in the red for New York, those
hoping for a rebound were left tallying up the worries. .N
Hong Kong's airport, the world's busiest cargo hub, had been
forced to suspend check-ins again as the mood remained febrile
after weeks of increasingly violent demonstrations in the
Chinese-ruled territory. Investors were also still assessing the damage caused by
Monday's crash in Argentina after its President Mauricio Macri
became the latest pro-free market, pro-reform leader to be given
a beating at the polls by a populist rival. Battered local markets were struggling to decide which way
to go. Government bond price and bank stocks were showing
tentative signs of stabilisation L8N2593U4 , but nothing
compared to what was lost in Monday's mauling.
The peso dropped 15%, equities .MERV had crumbled 48% in
dollar terms - the second-biggest one-day slump anywhere since
1950 - while a 100-year bond that investors had gobbled up
recently tumbling 20% as fears of yet another default spiked.
"Yes, Argentina is a small economy. However, the last thing
global markets want to see is another market-friendly government
fall to populism and/or geopolitics," said Rabobank strategist
Michael Every.
He added the "wall of worry" also now includes: the trade
war, Brexit, China, Hong Kong, Iran, Italy, Kashmir, North
Korea, South China Sea, Turkey, and Venezuela. "Did I miss
anything with tired eyes?"
With so much uncertainty around, Europe's traditional safety
play, the 10-year German government bond, saw yields hit a new
record low of -0.6% GVD/EUR
The dismal data had driven that too showing that economic
sentiment among German investors had slumped far more than
expected last month and to the lowest level since the euro debt
crisis was ratcheting up in late 2011.
Equivalent U.S. Treasury yields were straining for their
lowest in almost three years too, gold climbed to a fresh
six-year high and the yen stayed within a whisker of a
seven-month peak versus the dollar. /FRX
ING analysts said the yen was benefiting "from the best of
both worlds", pointing to general risk aversion and a rush to
price in more interest rate cuts by the Federal Reserve. They
think the yen, at 105.10 JPY= in Europe, will rally to 102 or
103 per dollar later this year.
The Swiss franc, also viewed as a safe haven, rose 0.1% to a
two-year high against the euro of 1.0862 francs EURCHF=EBS
though that was largely down to another dip from the euro as it
backpedalled to $1.1204 EUR=EBS against the dollar.

PANIC AND CHAOS
While there was a danger the moves were be being exaggerated
by low northern hemisphere summer trading volumes, there was no
shortage of gloomy news for investors looking to catch their
breath from several months of market ructions.
The weeks-long protests in Hong Kong began in opposition to
a bill allowing extraditions to mainland China but have quickly
morphed into the biggest challenge to China's authority over the
city since it took Hong Kong back from Britain in 1997.
A state of "panic and chaos" now exists, the city's
embattled leader Carrie Lam said on Tuesday, defying fresh calls
to quit.
As she spoke, the benchmark Hang Seng index .HSI hit a
seven-month low. By the close, it had dropped 2.1%, dragging
down markets across Asia and taking its losses since the
protests began in June past 6%.
MSCI's broadest index of Asia-Pacific shares .MIAP00000PUS
skidded 1.2% as Chinese stocks .CSI300 and the Nikkei in Tokyo
both fell around 1% too though at least the yuan remained quiet.
The dive for safety pushed gold XAU= up another 0.5% to
$1.523 per ounce and its latest six-year high.
Oil prices meanwhile held their ground as expectations that
major producers will continue to reduce supplies balanced out
worries about sluggish economic growth.
Brent crude inched up to $58.74 while U.S. West Texas
Intermediate futures CLc1 were flat at $54.81 a barrel.
It comes too with Saudi Arabia repushing plans to float its
national oil company Saudi Aramco in what could be the world's
largest initial public offering (IPO).
"With Saudi Aramco reportedly eyeing an IPO once again,
there is some support to the idea that Saudi Arabia has a
heightened interest in strong crude prices and will cut its own
output accordingly," Vienna-based consultancy JBC Energy said.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters poll: 2018 global stock market forecasts interactive
http://tmsnrt.rs/2nHJiJ9
Yen vs U.S. dollar https://tmsnrt.rs/2MYxgb6
Biggest tail risks https://tmsnrt.rs/2YLSe3U
Argentina primary election interactive https://tmsnrt.rs/2MYvyX2
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