Markets slide as Trump threatens China with $200bn of new tariffs - as it happened | Business

European markets close lower

The escalation of the potential trade war between the US and China following Donald Trump’s threat of new tariffs on $200bn worth of goods has sent a shudder through the markets.

With Wall Street lower - and the Dow Jones Industrial Average losing all its gains so far this year - European markets have ended the day in downbeat mood. The FTSE 100 was among the better performers, helped ironically by sterling hitting a seven month low. The final scores showed:

The FTSE 100 fell 0.36% or 27.48 points to 7603.85
Germany’s Dax dropped 1.22% to 12,677.97
France’s Cac closed down 1.1% at 5390.63
Italy’s FTSE MIB fell 0.07% to 22,084.33
Spain’s Ibex ended 0.14% lower at 9755.4

On Wall Street the Dow Jones Industrial Average is currently down 342 points or 1.37%.

On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.

4.41pm BST 16:41

More on Navarro’s comments, from Associated Press:

Ken Thomas (@KThomasDC)
WH trade adviser Peter Navarro on #China: "This is a trade dispute, nothing more, nothing less. President Trump has a great relationship with President Xi."
June 19, 2018

Ken Thomas (@KThomasDC)
Navarro asked if Trump admin has any plans for talks with the Chinese about trade. "Our phone lines are open, they have always been open."
June 19, 2018

4.34pm BST 16:34

The White House is not planning any imminent talks with China on the trade dispute, the FT is reporting (£).

Peter Navarro, a senior US trade adviser told reporters on a press call that China had been given a chance to address US complaints over the past year, and no more discussions were planned.

Updated at 4.34pm BST

4.28pm BST 16:28

The prospect of US mid-term elections could determine how the trade dispute plays out, with some suggesting Trump will continue to play hardball to prove to the voters that he is still putting “America first.” But this could backfire. Fiona Cincotta, senior market analyst at City Index, said:

The only potential stop for Trump could be the reality of mid term elections. A large percentage of the US population are not going to be happy about paying more for imported goods. This is a long shot and still sufficient time away for damage to the markets to continue, however it could also prevent this trade war from spiralling out of control.

4.01pm BST 16:01

Here are some major US companies with trade links to China:

Carl Quintanilla (@carlquintanilla)
Percentage of revenue from China:

* Deere: 8%
* Caterpillar: 9%
* Boeing: 11%
* Nike: 12%
* 3M: 13%
* Tiffany: 13%
* Starbucks: 15%
* McDonalds: 15%

(via @TheDomino) @CNBC @SquawkStreet
June 19, 2018

3.38pm BST 15:38

Dominic Rushe

Here’s our report on the market losses following Trump’s escalation of the trade dispute with China:

US stock markets fell sharply on Tuesday morning, following similar drops across the world, as investors feared that escalating tensions could trigger an international trade war.

Donald Trump threatened to impose an additional $200bn in levies on Chinese goods on Monday evening, days after the US announced $50bn in tariffs aimed at punishing what the US administration sees as unfair trade practices. China has already said it will retaliate for last week’s move and said it would escalate its response if further tariffs were imposed.

Monday night’s move sent global stock markets sharply lower and the Dow followed suit when it opened, dropping over 340 points (1.37%) in early trading. The S&P 500 and tech-heavy Nasdaq also fell close to 1%.

Some of the US’s biggest exporters were among those most affected. Boeing dropped 3% and construction and mining equipment maker Caterpillar shed 2.7%. Tech companies, too, felt the pinch with Apple down 1.5%.

The full story is here:

3.29pm BST 15:29

US markets continue to fall, with the Dow Jones Industrial Average now down more than 400 points or 1.6%. Connor Campbell, financial analyst at Spreadex, said:

There was no let up on Tuesday, the US open extending the disastrous trading that began on Monday.

Plunging 400 points to hit a 2 week nadir, the Dow Jones was the latest index to display its abject terror at the trade war Donald Trump seems intent on provoking. The Dow’s day was made worse by the strength of the dollar; though the greenback struggled against the yen, it stomped all over the euro and the pound, sending the single currency and sterling to 19 day and 7 month lows respectively.

Over in the Eurozone, where political issues in Germany cut the legs out from under the region on Monday, the situation was just as nasty. The DAX shed 200 points for the 2^nd consecutive session, leaving it on track for its worst close since the start of May, while the CAC lost 1.5%.

It was cable’s 0.6% fall that arguably helped the FTSE avoid the kind of gory losses seen by its US and Eurozone peers. Though hardly something to celebrate, the UK index’s 0.5% decline was nevertheless half of its post-open drop, and roughly a third of the losses incurred elsewhere.

Updated at 3.30pm BST

3.05pm BST 15:05

Emerging markets are also under pressure as the fears of a trade war grow.

2.53pm BST 14:53

A US tech industry group is very unhappy about Trump’s planned tariffs, saying they raise prices for Americans, harm US competitiveness, and will hinder economic growth. Jose Castaneda, spokesman for the Information Technology Industry Council, said:

The Trump Administration’s decision to escalate trade tensions with China is irresponsible and counterproductive. We appreciate President Trump’s efforts to protect the United States’ ‘crown jewels’ but tariffs are simply the wrong way to do it. Tariffs will harm U.S. workers and businesses from Silicon Valley to Silicon Prairie. The White House needs to work with our allies to create lasting change with China – too many jobs and livelihoods are at stake to get this wrong.

2.42pm BST 14:42

A trade war which would benefit no one may not actually happens, says Chris Payne, managing director at GWM Investment Management:

Despite all this tit-for-tat posturing, an all-out trade war is unlikely to ensue because it will not benefit anybody, especially China whose economy is going through a major deleveraging process. It should also be noted that China will soon run out of US goods on which to impose retaliatory tariffs which will move this negotiation to a more sensible and constructive forum.

Although as noted previously, China could slap higher tariffs than 10% if it really wanted to push back at Trump.

2.39pm BST 14:39

Wall Street opens sharply lower

Fears of an escalation in the trade tensions between the US and China have sent US markets sharply lower at the open.

President Trump’s threat to impose a 10% tariff on $200m of Chinese goods has led to new warnings from Beijing that it would retaliate. So the growing prospect of an all out trade war, and the damage that would cause to the global economy, has sent the Dow Jones Industrial Average down around 1.3% in early trading. This means the Dow has given up all its gains of the year.

The S&P 500 and Nasdaq Composite have also opened in the red.

Meanwhile the Vix index of volatility hit a two week high of 14.67 before recovering to 14.18, still up 15% on the day so far.

The Wall Street open today — Photograph: Bloomberg TV

2.19pm BST 14:19

Catchup: How trade war fears are hurting markets today

Time for a recap, as investors brace for the Wall Street open, in just over 10 minutes.

Stock markets around the globe are suffering losses after Donald Trump took another step towards a trade war.

Overnight, Trump instructed US officials to draw up plans for tariffs on $200bn of Chinese imports, in the latest tit-for-tat move between the two countries.

Trump said he was acting because China had outlined $50bn of tariffs on US products over the weekend [a response to America’s original tariffs laid out earlier this year].

China hit back, accusing the US of blackmail. The Commerce Ministry declared:

This practice of extreme pressure and blackmail deviates from the consensus reached by two parties through many negotiations, and it also disappointed the international community.

“If the U.S. side becomes irrational and issues the list, China will have to adopt measures that are comprehensive measures in quantity and quality in order to make strong countermeasures.”

The move rocked markets in Asia, sending Chinese stocks reeling to their lowest level since summer 2016. Equities in other regions also fell, as investors dumped riskier assets and economists warned a trade war would hurt growth.

Britain’s FTSE 100 slumped by 80 points at the open, but has currently clawed back half of those losses.

Here’s the situation:

FTSE 100: down 0.5%
German DAX: Down 1.2%
French CAC: down 1.1%
Japanese Nikkei: closed down 1.8%
Hong Kong’s Hang Seng: closed down 2.8%
China’s Shanghai Composite: closed down 3.8%

Commodities, such as oil, wheat and soybeans, have also fallen.

There is also drama in the foreign exchange markets, with most currencies falling against the US dollar. Sterling has fallen through $1.32 for the first time since November 2017.

Analysts fear that the world could be heading towards a trade war, unless the US and China can ratchet the pressure down again.

Miles Eakers, Chief Market Analyst at global payments firm Centtrip, says investors are right to worry.

Any retaliation by Beijing is likely to fuel the escalating trade war with Washington, which will in turn have a negative impact on equities and increase risk aversion.

“Investors are not the only ones troubled by the current situation. The world’s largest superpowers’ shift towards protectionism has global ramifications. International companies may grow less competitive due to tariffs and the cost of raw materials purchased overseas could rise by 10–20%. It’s highly possible that any further action from the US or China could put an end to the current 10-year bull market run.”

Updated at 2.21pm BST

Markets slide as Trump threatens China with $200bn of new tariffs - as it happened

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