Stocks drop on China Telecom ban, German growth downgrade

Stocks drop on China Telecom ban, German growth downgrade

AFP

LONDON: Stock markets dropped Wednesday with tech firms in the firing line after China Telecom was banned from the United States, while Germanys downgrade to its growth outlook also weighed on sentiment.
Traders were largely unmoved by further record-high closes for the Dow and S&P 500 on Wall Street Tuesday. Oil markets slid Wednesday but remained around multi-year highs on expectations about surging demand and concerns over supplies. A strong corporate earnings season has provided some much-needed support to investors in recent weeks as companies showed resilience in the face of supply snarls, surging commodity and wage costs, as well as spiking Covid-19 cases.
But long-running friction between Washington and Beijing continues to cast a dark shadow over trading floors, with the two sides locked in a stand-off over a range of issues including Taiwan, national security, technology, trade and Hong Kong. Also on the radar Wednesday is a UK government budget update as Britain looks to bring down its deficit which ballooned during the pandemic.
Alongside its tax and spend plans, many of which have been trailed ahead of the budget announcement around 1130 GMT, the government will update its forecasts for UK economic growth, with investors hoping for better news than out of Germany.
Europe’s biggest economy is projected to expand by around 2.6 percent this year, a slower-than-expected rebound from a pandemic-induced slump last year, largely owing to bottlenecks in global supply chains, the German government said. All eyes will be on the European Central Bank Thursday when it updates on its monetary policy amid expectations that major central banks will begin tapering their huge cash stimulus injections and raise interest rates before the end of the year as the economy recovers and inflation surges.