⏳ Final hours! Save up to 60% OFF InvestingProCLAIM SALE

GLOBAL MARKETS-Shares recoil as China retaliates in U.S. trade war

Published 04/04/2018, 10:30 pm
Updated 04/04/2018, 10:40 pm
© Reuters.  GLOBAL MARKETS-Shares recoil as China retaliates in U.S. trade war
EUR/USD
-
USD/JPY
-
UK100
-
XAU/USD
-
US500
-
FCHI
-
DE40
-
JP225
-
BA
-
DBKGn
-
CAGR
-
AMZN
-
DX
-
GC
-
LCO
-
ESZ24
-
CL
-
DE10YT=RR
-
US10YT=X
-
KS11
-
MSCIEF
-
MIAPJ0000PUS
-
CSI300
-
DXY
-

* White House details tariffs on $50 bln of China imports

* China retaliates in kind

* Dollar falls, safe-haven yen gains

* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

* Government bonds and gold rally, oil slides

(Updates prices, add quote)

By Marc Jones

LONDON, April 4 (Reuters) - Stock markets recoiled on Wednesday as China retaliated in an escalating trade war with the United States, leaving investors reluctant to take positions in anything but the safest of assets.

U.S. shares rose on Tuesday on the view that President Donald Trump's Twitter attacks on retailer Amazon (NASDAQ:AMZN) would not translate into actual policy.

Yet trade worries were never far away. Late on Tuesday, the Trump administration announced 25 percent tariffs on $50 billion of annual imports from China, covering about 1,300 industrial technology, transport and medical products. responded with penalties on $50 billion of U.S. goods ranging from soybeans, cars and chemicals to whisky, cigars and tobacco with its Vice Finance Minister stressing the country had never given in to external pressure. moves triggered further heavy selling in global stock markets and commodities, with U.S. stock futures ESc1 sliding 1.4 percent, soybean futures Sv1 plunging 4.5 percent and the dollar .DXY and China's yuan CNH=D3 both hit.

In Europe, London's FTSE .FTSE , Paris's CAC40 .FCHI and the export-heavy German DAX .GDAXI fell between 0.6 percent and 1.2 percent.

"The market should be focused on it because it's (U.S. protectionist measures are) bad news," fund manager Ashmore's head of research, Jan Dehn, said.

Trump denied on Wednesday that the United States was in a trade war with China. Organisation for Economic Co-Operation and Development's head Angel Gurria said the U.S. exports $150 billion of goods a year to China whereas China exports $500 billion to the U.S., meaning China's tariffs were therefore not proportional. swing in risk sentiment put the pep back into bonds, with yields on U.S. 10-year Treasury debt US10YT=RR down three basis points at 2.75 percent.

Borrowing costs also nudged lower in Europe even as the first March reading on euro zone inflation, important data for markets as the European Central Bank looks to wind down its massive monetary stimulus, came in firm at 1.4 percent. Bund yields slipped back under 0.50 percent DE10YT=RR , just off 2-1/2 month lows hit last week.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had spent most of its session dithering either side of flat before ending 0.3 percent lower.

China's retaliation came after trading hours for Japan's Nikkei .N225 , which added 0.2 percent in thin volumes and Chinese blue chips .CSI300 ended down 0.2 percent. South Korea .KS11 saw the big move, dropping 1.4 percent.

Emerging market stocks .MSCIEF , which have proved resilient to trade tensions, tumbled 1.6 percent and turned negative on the year. futures for the S&P 500 ESc1 were also pointing to New York opening between 1.5 percent and 1.8 percent down.

Boeing (NYSE:BA) BA.N shares fell 7.2 percent in pre-market trading. China's duties on major U.S. imports included aircraft.

FACTORIES FADE A LITTLE

The dollar dropped to 106.14 yen JPY= , after edging up from a low of 105.70 on Tuesday. The euro hovered at $1.2287 EUR= , after easing from a high of $1.2335 overnight, while the dollar index was 0.2 percent lower at 90 .DXY .

"It is not our view to expect risk aversion to sustainably rise, even though nervousness is indeed high," Credit Agricole (PA:CAGR) currency strategist Manuel Oliveri said in the Reuters Global Markets Forum.

The Mexican peso and Canadian dollar CAD= both held firm after hitting a nearly five-month and five-week highs respectively in recent days on growing optimism about the prospect of a NAFTA trade deal. also seemed to be keeping their nerve on the global economic outlook after a host of manufacturing surveys (PMIs) showed some slowing, but from lofty levels in many regions.

Activity in Japan's service sector also grew at its slowest pace in 17 months last month British shop prices dropped at the fastest pace for more than a year while Australian February building approvals fell 6.2 percent.

"If global PMIs slow and avoid overheating concerns, that is good for risk appetite. If they slow for 'the wrong reasons' like trade protectionism, that is much more worrying," Deutsche Bank (DE:DBKGn) global strategist Alan Ruskin said.

"The March data is at the most a very early warning shot for policymakers not to get too complacent on global growth resilience," he said.

Trade wars were a particular concern for developing Asia, where South Korea, Taiwan, Thailand, China, Indonesia, and India reported a slowing in factory activity.

In commodity markets, gold jumped 0.85 percent to $1,343 an ounce XAU= , recovering some of Tuesday's losses.

Oil prices slipped with Brent crude futures LCOc1 off 97 cents to $67.14 a barrel, while U.S. crude CLc1 fell 98 cents to $62.51 a barrel.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ MSCI and Nikkei chart

http://reut.rs/2sSBRiD

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.