Stock markets were hurt this week by escalating trade tensions. The Nasdaq and Hang Seng indexes took the hardest hits from the protectionist rhetoric of the US President. In Europe, the German DAX Index, where the automobile and industrials sectors are strongly represented, also lost ground. A deepening sense of unease continued to weigh on markets in mainland China. The benchmark Shanghai index has tumbled by 20% in just five months.
The week was positive, however, for the energy sector. Oil rose to the highest prices seen in a month, as the demand by the US for Iran’s customers to halt their imports overshadowed Saudi Arabia’s promise to boost output. On Wednesday, the US reported lower-than-expected crude oil stockpiles, which drove the WTI oil price above USD 72.50, which is above the three-year high seen in May. Oil exploration companies, such as Noble, rose by almost 10%. But oil users, such as cruise line operators, see rising fuel costs. Cruise line operator Carnival trimmed its outlook, as the higher oil price and currency movements are hurting earnings. Carnival lost 7%.
On Tuesday, GE announced its long-awaited great unwinding. The company has decided to focus on three segments: aviation, power, and renewable energy. It will spin off its health care business (just as Siemens did earlier), and separate its oil business. GE said it will maintain its current dividend until the spinoff is complete. The stock jumped by almost 8% on the news.