Markets hit by trade war fears

GLOBAL share prices nosedived yesterday as trade war fears intensified after Donald Trump slapped tariffs on China.

The tariffs could hit over $50billion of Chinese imports as America hits back over what it claims is years of intellectual property theft. China said it was ready to retaliate with “necessary measures”.

The FTSE 100 Index fell below the 7,000-point barrier for the first time since December 2016, closing down 86.38 at 6952.59 as over £20billion was wiped from the value of Britain’s top companies.

Leading European stock markets fell by about 1.5 per cent and the US Dow Jones index was over 1 per cent lower.

The trade tariffs overshadowed earlier data showing the first increase in UK retail sales in three months.

The 0.8 per cent rise in February from the previous month was double the rate anticipated by economists, although sales were still down 0.4 per cent in the three months to February.

Jasper Lawler, head of research at London Capital Group, said: “Investors are preparing for the worst, namely a titfor-tat reaction from China and the negative consequences it could have for the free flow of goods and services. A trade war damages the idea of synchronised global growth in 2018.”

A drop in inflation and signs of wage growth have raised hopes that the squeeze on household spending budgets is easing, although a raft of store closures shows the pressure on high street stores from spiralling costs and a switch to online shopping. Analysts also pointed out that March sales data could be hit by the poor weather conditions.

Federation of Small Businesses chairman, Mike Cherry, said: “Small retailers are facing a perfect storm of business rates hikes, rising labour costs and persistently high inflation. Six in 10 were not expecting performance to improve over the first quarter of this year. “The hope is today’s slight uptick in sales is a sign of things to come. If the forecast of a return to something like 2 per cent inflation in the coming year proves accurate, that’ll be a lifeline for small retailers.

“An easing of inflationary pressure will mean greater spending power and more capacity to invest, hire and grow.”