Escalation of US-China trade dispute pushes markets lower
European stocks fell on Wednesday as an escalation in the U.S.-China trade dispute looked set to bring a six-session winning streak to an end.
The pan-European STOXX 600 index was down 1.1 percent by 0905 GMT, while Germany’s exportheavy DAX fell 1.2 percent.
Though investors have been looking positively toward the secondquarter earnings season, the increasingly uncompromising rhetoric on trade has weighed on equities recently. All European sectors were in negative territory, with those most exposed to action on tariffs taking the most points off the STOXX. Basic resources index was down 3.1 percent and autos index was down 1.7 percent.
Japan’s Nikkei snapped a threeday winning streak on Wednesday after the United States said it would impose tariffs on an additional $200 billion worth of Chinese goods, hitting shippers and machinery makers hard. The Nikkei share average ended 1.2 percent lower with the index retreating from a 2-1/2-week high hit the previous day after gain- ing for three straight sessions.
Washington decided to impose the extra tariffs after efforts to negotiate a solution to the trade dispute failed to reach an agreement, senior U.S. administration officials said on Tuesday. U.S. officials released a list of thousands of Chinese goods on which the administration wants to impose tariffs, including hundreds of food products and tobacco, chemicals, coal, steel and aluminium. Investors were wary of China’s response after the assistant commerce minister said the proposed U.S. duties would harm the World Trade Organization and globalisation.
Oil prices were also hit by the trade war concerns. The U.S. had said it would consider requests from some countries to be exempted from other sanctions that it plans put into effect in November that prevent Iran from exporting oil. Brent crude futures lost 0.8 percent to $78.22 a barrel. Oil had risen the previous day, supported by a larger-than expected U.S. stock draw and supply concerns in Norway and Libya.