Stocks sag, dollar broadly higher with trade in focus

Passersby using umbrellas struggle against a heavy rain and wind in front of an electronic stock quotation board as Typhoon Shanshan approaches Japan's mainland in Tokyo

Passersby using umbrellas struggle against a heavy rain and wind in front of an electronic stock quotation board as Typhoon Shanshan approaches Japan's mainland in Tokyo

European shares were expected to be subdued too with futures for Eurostoxx 50, Germany's DAX and London's FTSE all starting lower.

The greenback's rise - up nearly 8 per cent since end-March - has sent emerging markets reeling, with MSCI's emerging equity benchmark falling for the sixth day in a row and down 1.6 per cent on the day while an index of emerging market currencies shed 0.4 per cent to 15-month lows. It had lost 0.6 percent to settle at $69.80 a barrel in NY.

European shares were largely flat, although London's blue-chip FTSE rallied nearly 1 percent thanks to a weak British pound.

"It looks nearly certain that (US President Donald) Trump will impose 25% tariffs on $200 billion worth of imports from China", said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

US stocks had slipped on Tuesday as a drop in heavyweights Facebook and Nike added to worries over trade negotiations between the United States and other major economies.

"An escalation of the U.S".

"Then there is the U.S".

The euro fell 0.4 per cent to a 10-day low at $1.1564 while the yen dropped to 111.525 per dollar having been higher during Asian trading.

"Conviction and participation will likely remain light until an announcement", they said.

The euro was a tad softer at $1.1624.

Investors are also watching for developments as the United States and Canada resume talks about revamping the North American Free Trade Agreement (NAFTA). Canada insisted on Wednesday that there was room to salvage the pact despite few signs that a deal is imminent.

Unrest spreads in Iraq as Iranian mission stormed, oil workers held hostage
The new parliament finally met on Monday for the first time, but broke up after a day having failed to elect even a speaker. The protesters have called for an end to Iran's influence and to the Iraqi government's dysfunction.

The dollar, considered a safe haven at times of turmoil because of its status as the world's reserve currency, has generally benefited from these trade uncertainties. It has gained 8 percent since end-March, with currencies in emerging markets taking a hammering.

The MSCI Asia Pacific Index of shares was down 1 per cent as of 11:46am in Hong Kong, with benchmarks in Jakarta sliding 3.1 per cent and Manila 1.7 per cent. Indonesia's rupiah - one of the region's more vulnerable thanks to the country's external financing needs, was little changed after hitting its weakest since the Asian financial crisis Tuesday.

A JPMorgan emerging market currency index .MIEM00000CUS fell to its lowest since May 2017. They are fretting over the impact of rising USA inflation and interest rates on heavily indebted Asian economies.

Fixed income has also been hit, with the Bloomberg Barclays emerging-market index for dollar bonds down nearly 4 per cent so far this year.

The Nasdaq index gained 5.7% last month, with Apple gaining nearly 20%, the biggest%age gains since April 2009.

"This morning's inflation number was very high and the authorities still haven't got a credible strategy to deal with that", said Chris Scicluna, head of economic research at Daiwa Capital Markets.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., August 31, 2018.

Sterling added to Wednesday's gains as some investors positioned for a favourable Brexit outcome though it was well below the previous session's high as progress was uncertain.

Crude oil futures fell after US data showed gasoline inventories rose unexpectedly last week, overshadowing a bullish drawdown in crude stocks.

USA crude fell 1.39 percent to $68.90 per barrel and Brent was last at $77.35, down 1.05 percent on the day.

U.S. crude futures fetched $69.82 per barrel, down 0.3% and off $70.50 marked on Thursday, their highest levels since July 20.

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