Global shares lose steam on weak US retail sales, Brexit in focus

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Global stocks barely moved as weak US retail sales data raised concerns about the health of the world’s largest economy and the possibility of the global recession on Thursday, while sterling was volatile as negotiations on a Brexit agreement persisted.

Both Asia-Pacific’s broadest index of shares outside Japan and Japan’s Nikkei was slightly altered in early trade, while US stock futures lost 0.15%.

The S&P 500 shed 0.20 percent the day before after data showed U.S. retail sales contract for the first time in seven months in September, in a possible sign that manufacturing-led weakness might spread to the wider economy.

“Apart from declining business confidence and reducing investment spending, it looks like the trade war has claimed yet another victim as consumers continue chickening out,” said Chris Rupkey, Chief Financial Economist at MUFG Union Bank.

Considering that US demand was one of the few remaining bright spots in the global economy, fears about a global recession were fanned by the results.

US Treasury Secretary Steven Mnuchin said on Wednesday that US and Chinese trade negotiators are trying to get their leaders to sign a Phase 1 trade deal text next month.

But he also said no arrangements were announced last week for another high-level discussion on the trade deal.

“While the US has suspended an increase in tariffs, it hasn’t gone so far as to abolish tariffs entirely, so it’s hard to expect a quick pick-up in the economy,” said Yoshinori Shigemi, JPMorgan Asset Management’s global market strategist.

Equity declines have been offset by a solid start to the earnings season, although this is partially because investors have already significantly lowered their expectations, with earnings for S&P 500 companies expected to show a 3 percent decline for the quarter, according to Refinitiv data.

After its quarterly results, Bank of America’s shares rose 2 percent. After its earnings beat Wall Street estimates, Netflix rose 9.9 percent in after-hours trade.

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