London (AFP) – A sea of red descended on traders’ screens Friday after US President Donald Trump warned that he could slap another $100 billion (86 billion euros) of extra tariffs on China’s imports, fanning fresh fears of a full-blown trade war between the two superpowers, dealers said.
Trump ratcheted up the rhetoric against China, saying he had instructed his trade officials to “consider whether $100 billion of additional tariffs would be appropriate.”
“Trump’s announcement of a potential further $100 billion of tariffs on China briskly ended any hopes of an amicable conclusion to escalating trade tensions,” said London Capital Group analyst Jasper Lawler.
The news jarred investor sentiment, which was already fragile before publication of Friday’s crucial non-farm payrolls data in the United States.
World equities had powered higher Thursday as investors judged recent trade war fears were overblown.
However, Frankfurt, London and Paris equities languished in negative territory on Friday, as Trump’s warning loomed large.
“Stock markets in Europe are in the red … as trade war fears have been ramped up,” added analyst David Madden at CMC Markets.
“Overnight, President Trump warned China he might seek to impose more tariffs on $100 billion worth of imports.
“Dealers are fearful this will result in a full-blown trade war, and equities are feeling the pain.”
Asian stocks mostly receded on Friday. Tokyo finished in the red, losing 0.4 percent. There were also losses for Seoul and Sydney, while Shanghai was shut.
Hong Kong however outperformed regional peers with a sizeable 1.1-percent gain, with the market playing catch-up after Thursday’s closure.
– Eyes on US jobs –
Later on Friday, investors will scrutinise the monthly jobs report from the US Department of Labor for clues for the outlook on Federal Reserve monetary policy.
“Any signs of increased inflationary pressure from higher wages would boost the chances of a steeper path of rate hikes from the Fed and therefore lift the dollar whilst pulling stocks lower,” noted Lawler.
“On the other hand, any signs that earnings growth is weak tends to weigh on the dollar whilst boosting stocks.”
Wall Street closed higher Thursday for the third straight day, as investors’ fears over a US-China trade war eased.
However, officials from the world’s two largest economies traded fresh blows on Friday, reigniting concerns that a damaging trade war could be in the offing.
Trump had already asked for $50 billion worth of Chinese goods to be punitively taxed, which has sparked a formal challenge from Beijing at the World Trade Organization.
China has unveiled plans for painful import duties targeting politically-sensitive US exports, including soybeans, aircraft and autos.
– Key figures around 1115 GMT –
London – FTSE 100: DOWN 0.2 percent at 7,184.72 points
Frankfurt – DAX 30: DOWN 0.7 percent at 12,224.90
Paris – CAC 40: DOWN 0.5 percent at 5,250.42
EURO STOXX 50: DOWN 0.7 percent at 3,405.95
Tokyo – Nikkei 225: DOWN 0.4 percent at 21,567.52 (close)
Hong Kong – Hang Seng: UP 1.1 percent at 29,833.31
Shanghai – Composite: 3,131.84 (Wednesday close)
New York – Dow: UP 1.0 percent at 24,505.22 (close)
Euro/dollar: DOWN at $1.2236 from $1.2240 at 2100 GMT
Dollar/yen: UP at 107.42 yen from 107.39
Pound/dollar: UP at $1.4004 from $1.4003
Oil – Brent North Sea: DOWN ten cents at $68.23 per barrel
Oil – West Texas Intermediate: DOWN 13 cents at $63.41