World stock markets retreat after surge on China tariff cut

A Saudi man walks at the Tadawul Saudi Stock Exchange, in Riyadh, Saudi Arabia, Monday, June 15, 2015. Saudi Arabia's stock market, valued at $585 billion, opened up to direct foreign investment for the first time Monday, as the kingdom seeks an economic boost amid low global oil prices. (AP Photo/Hasan Jamali)

HONG KONG (AP) – Global stock markets retreated Friday as France and Germany reported weak factory data and the death toll from a virus outbreak in China rose further.

Germany’s DAX lost 0.3% to 13,533.51 while the CAC 40 in Paris was flat at 6,037.65. Britain’s FTSE 100 gave up 0.2% to 7,487.97. On Wall Street, the future contracts for the S&P 500 and the Dow Jones Industrial Average both fell about 0.1%.

Germany reported new manufacturing orders fell 2.1% in December and industrial production dropped 3.5% from a year earlier while France reported factory output fell 2.8%, adding to concerns over slowing growth in Europe.

Investors are looking ahead to U.S. employment figures due out Friday.

Markets got a boost Thursday after Beijing said it will cut duties on $75 billion of U.S. goods as part of a trade truce with Washington. Wall Street closed higher for a fourth day, propelled by gains for technology stocks and strong corporate earnings reports.

China’s tariff cut “boosted sentiment,” though “gains were tempered by continued concerns around the impact of the coronavirus outbreak,” Mizuho Bank said in a report.

Beijing is also promising tax cuts and other help to businesses in a bid to offset the economic blow from the virus outbreak that has put the world’s second-largest economy on lockdown. The extent of potential losses is unclear.

On Friday, there were 31,400 people confirmed infected by the virus worldwide. China confirmed 31,161 cases and 636 deaths as of Friday. More than 310 cases have been confirmed outside mainland China, including two deaths in Hong Kong and the Philippines.

Still, Chinese factories and offices are starting to reopen following an extended Lunar New Year holiday, but companies are forecasting big revenue declines due to the closure of stores, amusement parks, cinemas and other businesses.

Beijing’s tariffs reductions, which follow U.S. cuts last month on Chinese goods, are part of a “Phase 1” trade agreement with Washington aimed at ending their fight over China’s technology ambitions and trade surplus. There was no indication China altered its cuts in response to the virus outbreak, but the surprise announcement helped to buoy market sentiment.

Japan’s Fast Retailing announced it has closed 350 stores, or about half of its 750 outlets in China to comply with quarantine regulations, while Toyota Motor Corp. said it was extending production stoppages at its China factories by an extra week, to Feb. 16. Nissan Motor Co. said January sales of the company and its local partners fell nearly 12% in January from a year earlier due to the virus outbreak and the prolonged holidays.

Hong Kong’s Hang Seng index fell 0.3% on Friday to 27,404.27, while the Shanghai Composite Index rebounded, gaining 0.3% to 2,875.96. Tokyo’s Nikkei 225 lost 0.2% to 23,827.98.

The Kospi in Seoul sank 0.7% to 2,211.95 and Sydney’s S&P-ASX 200 lost 0.4% to 7,022.60. India’s Sensex shed 0.4% to 41,135.82. Shares fell in Taiwan and Thailand but rose in Malaysia and Indonesia.

Investors appear to have set aside concerns about the virus this week, mostly focusing instead on encouraging U.S. economic data and company earnings reports.

ENERGY: Benchmark U.S. crude was flat at $50.95 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 20 cents on Thursday. Brent crude, used to price international oils, added 7 cents to $55.00 per barrel in London. It fell 35 cents the previous session to $54.93.

CURRENCY: The dollar declined to 109.92 yen from Thurdsay’s 109.97 yen. The euro fell to $1.0964 from $1.0979.

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