Fear of trade war pushes markets lower

On Wednesday fears of a trade war between the world’s two largest economies returned to haunt markets on Wednesday, sending U.S. stock futures tumbling and sinking European and Asian equities. Treasuries climbed while the dollar was steady, and gold jumped.

Hopes that Tuesday’s gains in U.S. equity markets would lead to a more lasting rebound foundered as contracts for the S&P 500, Nasdaq 100 and Dow all slumped alongside both the Stoxx Europe 600 Index and the MSCI Asia Pacific Index. China said it would levy 25 percent tariffs on imports of 106 U.S. products including soybeans, automobiles, chemicals and aircraft, in response to proposed American duties on its high-tech goods. Safe-haven assets including bullion and the Japanese yen rallied, while European bonds tracked the jump in Treasuries.

Elsewhere inflation data from Europe matched estimates, and the euro stayed higher.

The Stoxx Europe 600 Index sank 1.2 percent as of 11:33 a.m. London time on the largest tumble in almost two weeks. Futures on the S&P 500 Index declined 1.9 percent to the lowest in more than five months. The MSCI All-Country World Index dipped 0.4 percent. The U.K.’s FTSE 100 Index sank 0.7 percent to the lowest in more than a week on the biggest dip in almost two weeks. Germany’s DAX Index sank 1.7 percent to the lowest in more than a week on the largest tumble in more than a week. The MSCI Emerging Market Index fell 1.7 percent to the lowest in almost eight weeks on the biggest fall in a week. The MSCI Asia Pacific Index fell 0.6 percent to the lowest in almost eight weeks.

West Texas Intermediate crude decreased 1.9 percent to $62.31 a barrel, the lowest in more than two weeks. Copper sank 2.5 percent to $2.99 a pound and the biggest tumble in eight weeks. Gold increased 0.8 percent to $1,343.36 an ounce, the highest in more than a week.