Stocks dropped in Europe with early moves witnessing substantial losses for the major indices. Commodity prices turned lower following a mixed action in Asia as worries over global trade flows hurt the sentiments. FTSE is down 1.16% as a new analysis has found that the UK's decision to exit the European Union has already slowed the nation's economic growth by a cumulative 2.1% as of the first quarter of 2018, compared to likely results had Brexit been rejected two years ago. The study also found that the referendum vote is now costing the British government £440 million (around $584 million) per week in lost tax revenue, challenging longtimeclaims by Brexit supporters that leaving the EU would improve government balance sheets. The study is from the London-based Center for European Reform.
Meanwhile, the DOW futures slipped sharply, falling nearly 0.70% after the US President Donald Trump noted that the United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the USA. This is likely to ensure that trade worries hit the US stocks hard in the first session of trade this week.
Other European indices also turned weak in opening trades. Germany's DAX is down 1.20% on weak economic data. Germany's business confidence index fell to 101.8 in June, reports said citing survey data from Ifo Institute today. The initially estimated score for May was 102.2. The current conditions index came in at 105.1. The reading was forecast to drop to 105.7 in June from May's initial value of 106.0. At the same time, the expectations index score was 98.6 in June compared to the expected value of 98.0.
In other European indices, France's CAC is down 0.76% on the day. Asian markets ended lower with stocks in China and Hong Kong tumbling by more than a percent while Japanese equities fell 0.80%. Markets did not pay much attention to the continued efforts from the Chinese central bank to support the economy. China will lower some banks reserve requirement ratios (RRR) by 50 basispoints on July 5, the country's central bank said Sunday. The People's Bank of China (PBOC) will cut the RRR for most banks to support qualified debt-to-equity swap programs and help small businesses in financing, according to an online statement.
Meanwhile, modest gains emerged in US stocks after recent losses on Friday. A sharp rally by energy stocks contributed to the strength on Wall Street. DOW ended an eight session losing streak and closed up 120 points or half a percent at 24581. The S&P added modest gains of 0.20% while the tech heavy Nasdaq ended in red. Markets were battered last week on escalating tensions between the US and China following continued trade disputes. Donald Trump's threat to impose $400 billion in additional tariffs on Chinese goods has been hovering on the markets.
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