Markets reacted to a slew of less than positive headlines early on Thursday after major stock indices in the U.S. finished in the red on Wednesday. On Tuesday, the Zew economic sentiment index showed views on outlook as well as expectations of the German economy fell to -24.5, worse than the -22.3 that was expected. The Dax ended as one of the worst performers on Thursday’s session, falling some 0.70% by late afternoon.
In Asia, the Bank of Korea (BOK) unexpectedly cut interest rates by 0.25% and Japan’s exports fell for the seventh straight month. The BOK acted on rates due to poor economic outlook and continuing trade tensions between the U.S. and China. Seoul is being impacted by trade restrictions imposed by Japan which impacts the production of semiconductors, South Korea’s biggest export item. Its central bank slashed growth expectations and now expects growth of only 2.2 percent for 2019.
Overnight, President Trump said a deal with China is still a long way to go, causing major Asian indices to pullback. The Nikkei lost nearly 2.0 percent on Thursday, with Shanghai and Sensex also dropping nearly 1.0 percent each.
Germany, UK and France are reported to be working on Instex, the EU payments channel, which would allow them to provide sanctions relief to Iranians and save the 2015 nuclear deal signed during Obama’s presidency. Russia is also reported to be interested in supporting the channel and has requested Brussels to allow Iranian oil exports. Instex, which became operational in June has been criticised by Tehran as being not accommodative enough.