OCTOBER 23, 2018 – Stock markets slumped Tuesday on geopolitical risks stretching from US tensions with Russia and Saudi Arabia to trade issues and Italy’s budget stand-off with the European Union.
European stocks picked up where Asia left off, with Frankfurt losing more than two per cent in morning deals after Hong Kong closed down more than three per cent.
The dollar was down versus the euro, yen and pound.
Frankfurt was dragged down additionally by nearly an eight per cent plunge in the share price of chemicals and pharmaceuticals giant Bayer to 70.50 euros.
A San Francisco judge on Monday upheld a jury verdict that found Bayer-owned Monsanto liable for not warning a groundskeeper that its weed killer product Roundup might cause cancer.
Judge Suzanne Bolanos denied Monsanto’s request for a new trial but cut the $289 million damages award to $78 million to comply with the law regarding how punitive damages awards must be calculated.
Bayer said it would appeal the latest ruling.
There is meanwhile growing unease about Italy’s row with the EU over its purse-busting budget, which Brussels said breaks the bloc’s financial rules.
The populist government in Rome has refused to back down and cut its spending promises despite warnings about the country’s economic outlook.
The standoff comes as officials struggle to hammer out a Brexit agreement with a deadline for Britain to leave the EU looming in the background.
Pressure is also growing on Saudi Arabia after it admitted that a journalist critical of Riyadh had been killed at its Istanbul consulate.
Oil prices slid Tuesday as the market discounted concerns about potential supply disruptions in the Middle East.
Saudi Arabia said Monday it had no plans to repeat its harsh 1973 oil embargo, even as relations with the West sour following the death of Khashoggi.
In stocks, Wall Street closed mixed Monday as investors wait on company earnings.
The sharp losses Tuesday in Asia brought an end to a rally in previous sessions fuelled by China’s top brass issuing coordinated statements of support for the country’s markets and officials unveiling tax cut plans.
Nerves have been tested by US President Donald Trump’s warning that he will pull out of a nuclear treaty with Russia and bolster America’s arsenal.
Traders are also turning their attention to next month’s US midterm elections, which could turn control of Congress over to the Democrats.
