European markets are seen slightly lower on Tuesday as markets look set to continue a three-day sell-off, after China’s offshore yuan hit a record low and the U.S. branded Beijing a “currency manipulator” in a rapid escalation of the trade war.
The FTSE 100 is expected to open around 32 points lower at 7,192, the DAX is seen around 7 points lower at 11,652 and the CAC is set to open around 12 points lower at 5,230, according to IG data.
Global stocks extended already substantial losses Monday as China allowed its yuan currency to slide below 7 per dollar to an 11-year low, as Washington formally accused Beijing of manipulating its currency, the first designation of its kind since 1994.
China has also suspended the purchase of U.S. agricultural products, a blow to American farmers already stretched by the trade war. Markets worldwide have been in freefall since U.S. President Donald Trump on Thursday unexpectedly announced 10% tariffs on another $300 billion worth of Chinese goods, starting September 1.
Asian markets pared early losses but continued to trade lower Tuesday afternoon, led by mainland Chinese stocks, with the Shenzhen composite tumbling 3% while the Shenzhen component and Shanghai composite both fell more than 2%.
Back in Europe, June factory orders and July construction PMI (Purchasing Managers’ Index) data for Germany is due Tuesday morning. Reuters reported on Monday that two of Germany’s leading economists had urged the government to ditch its pledge to refrain from new debt, due to a combination of record-low borrowing costs and a slowing economy.
In corporate news, German postal giant Deutsche Post and Luxembourg-based serviced office provider IWG are set to report earnings Tuesday morning.