Trump tariffs: Markets fall as trade war fears mount

Trump tariffs: Markets fall as trade war fears mount

Trump tariffs: Markets fall as trade war fears mount

The US-China trade frictions escalated further over the weekend and we are unfortunately moving away from the "Grand Bargain" scenario towards the "trade war" scenario.

Broad measures of American equities have held up better than their Chinese counterparts, but striation within the USA markets suggests that investors anticipate steep losses in some stalwart names.

Earlier, the Shanghai Composite Index .SSEC ended 3.8 percent lower after slumping almost 5 percent at one point to its lowest level since mid-2016.

Investors sought safety in telecommunications, utilities, and other high-dividend stocks like Verizon, Procter & Gamble and Johnson & Johnson.

A panel discussion involving Federal Reserve Chairman Jerome Powell, European Central Bank President Mario Draghi, Bank of Japan Governor Haruhiko Kuroda, and Reserve Bank of Australia Governor Philip Lowe may also attract some attention.

Stocks are trading lower at midday Tuesday on fresh worries about a trade dispute between the US and China, although they've recovered somewhat from an early slump.

Stocks are ending mostly higher Wednesday, although the Dow Jones industrials are posting a seventh straight loss due to weakness in McDonald's and Travelers. An earlier version stated that the S&P 500 closed down 11.18 points at 2,762.57.

"When you get in a fight with your biggest buyer of agriculture, and the world's largest soybean buyer (China), even if (it) were to buy 20 percent less, it's a big deal", said Dan Basse, president of Chicago-based consultancy AgResource Co. Boeing and Caterpillar fell more than 3% apiece.

-China Business Council. Parker suggested that such steps might include delaying or denying licenses required by USA companies in China.

Shares of Japanese construction equipment makers Komatsu Ltd and Hitachi Construction Machinery tumbled 3.9 percent and 2.8 percent, respectively.

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Escalating political rhetoric on trade "will continue to be market negative at least for the next few days as the two countries continue to bare teeth, both for the benefit of domestic audiences and to convince each other of their seriousness and resolve", writes Terry Haines, analyst at Evercore ISI. Asian stocks had been poised for a mixed start to trading that sees Chinese markets reopen for the first time since trade tensions with the US escalated.

The S&P 500 index and the Nasdaq composite are also lower.

For months, the US and China have been sparring over tariffs on goods exported from China to the USA and vice versa.

He estimated that US crop farmers have lost $100 per acre in revenue over the past two weeks in the most rapid erosion of USA farm profit since at least 1979 due to the administration's battle with China. China threatened to retaliate, leading Trump to propose broader penalties.

"If the United States loses its senses and comes up with a new list, China will be forced to strike back hard, and launch comprehensive measures that match the U.S. move in quantity and quality", the Chinese Commerce Ministry said in a statement Tuesday.

The Canadian dollar averaged 75.32 cents United States, down 0.39 of a USA cent, as it continues to face the twin pressures of rising U.S. rates and trade fears, especially related to NAFTA.

USA and European equity markets looked set to follow Asia into the red.

The Trump administration on June 15 said that it will impose a 25 per cent tariff on $50 billion of Chinese exports.

Trump today announced tariffs of 25 percent targeting United States dollars 50 billion (43 billion euros) in Chinese imports from "industrially significant" technologies, making good on a pledge to punish the alleged theft of American intellectual property. In April the Commerce Department blocked ZTE from buying USA components for seven years, a move that amounted to a death sentence for the company.

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