Time for a little bargain hunting

London (AFP) - Stock markets enjoyed a breather from festering trade war fears Wednesday, giving investors a welcome chance to hunt for bargains after recent weakness, traders said.

Gains were capped, however, by expectations that the US-China trade row will escalate again after Beijing said it planned to impose anti-dumping sanctions worth billions of dollars on Washington.

“It’s been an uneventful day in financial markets so far,” said analyst Craig Erlam at Oanda. However, “this is likely to just be a temporary lull as tempers continue to flare between the US and China”, he warned.

- Get used to it -

“With China involving the WTO in the dispute and the US preparing more tariffs –- and threatening an eventual tariff on all imports –- it doesn’t appear this threat is going away any time soon and is something we should just get used to,” Erlam said.

Wall Street was a touch higher shortly after the opening bell.

Earlier in Asia, an ongoing stock market sell-off showed no sign of letting up, partly fuelled by trade fears, and partly by a brewing emerging markets crisis.

The new turn in the US-China spat meanwhile adds to a sense of pessimism across trading floors in recent weeks as the world’s top two economic powers stand on the cusp of an all-out trade war that observers fear could batter the global economy.

China on Tuesday said it would ask the World Trade Organization next week for permission to impose more than $7 billion in sanctions annually on the United States over anti-dumping practices. The WTO will discuss the issue on September 21.

On Wednesday China’s Vice Premier Hu Chunhua warned that protectionism poses a “serious hazard” to growth and cautioned “individual countries” against isolationism, in a veiled reference to the ongoing row.

- Oil up as Florence nears -

Oil prices, especially the US contract for WTI, rose as category 4 Hurricane Florence moved towards the eastern United States, threatening massive destruction.

“Oil prices are well supported as dealers try to get a handle on Hurricane Florence potential impact” on crude supplies, noted Oanda analyst Dean Popplewell.

Oil prices rose as the US braced for the onslaught from Hurricane Florence

In foreign exchange markets, the British pound dropped after reports that Brexit supporters in the Conservative Party were planning to remove Prime Minister Theresa May.

The weakness in the currency in turn helped London stocks in their recovery from morning lows, as big exporters stand to gain from a softer pound.

EU Commission President Jean-Claude Juncker meanwhile undermined a key part of Britain’s plan to quit the bloc, warning that London cannot expect to remain in parts of the single market.

- Key figures around 1330 GMT -

London - FTSE 100: UP 0.4 percent at 7,298.23 points

Frankfurt - DAX 30: UP 0.3 percent at 12,000.63

Paris - CAC 40: UP 0.7 percent at 5,322.69

EURO STOXX 50: UP 0.2 percent at 3,318.37

New York - Dow Jones: UP 0.1 percent at 25,988.64

Tokyo - Nikkei 225: DOWN 0.3 percent at 22,604.61 (close)

Hong Kong - Hang Seng: DOWN 0.3 percent at 26,345.04 (close)

Shanghai - Composite: DOWN 0.3 percent at 2,656.11 (close)

Euro/dollar: DOWN at $1.1595 from $1.1600 at 2040 GMT

Pound/dollar: DOWN at $1.3005 from $1.3026

Dollar/yen: DOWN at 111.47 yen from 111.57 yen

Oil - Brent Crude: UP 42 cents at $79.48 per barrel

Oil - West Texas Intermediate: UP 91 cents at $70.16 per barrel