Possible trade war has markets jittery
TOKYO: The rumblings of a global trade war shook stock and currency markets yesterday after United States President Donald Trump announced longpromised tariffs on Chinese goods and China’s Government pledged to fight any such war to the end.
Markets worldwide fell on news of the tariffs.
S&P futures were down 0.6%, suggesting Wall Street would open lower later in the day.
Trump signed a presidential memorandum yesterday that could impose tariffs on up to $US60 billion ($NZ83 billion) of imports from China, although they have a 30day consultation period, raising the chance that final measures could be watered down.
Investors fear that the US measures could escalate into a trade war, with potentially dire consequences for the global economy.
Beijing urged the United States yesterday to ‘‘pull back from the brink’’.
‘‘China doesn’t hope to be in a trade war, but is not afraid of engaging in one,’’ the Chinese commerce ministry said in a statement.
China unveiled its own plans yesterday to impose tariffs on up to $US3 billion of US imports in retaliation against US tariffs on Chinese steel and aluminium products.
Morgan Stanley Capital International’s broadest index of AsiaPacific shares outside Japan fell 2.5% as stocks across the region dropped.
Shanghai shares were down 3.8%.
‘‘The economic impact on both China and the US will be determined by what form the tariffs end up taking. The effects are likely to be felt more strongly in the US and will increase both consumer and producer prices,’’ wrote Hannah Anderson, global market strategist at J.P. Morgan Asset Management.
‘‘The equity market will bear the brunt of the market reaction. Most impacted will be the US, Korea, and Taiwan as companies domiciled in these mar kets make up a significant portion of the global production chain of Chinese exports.’’
‘‘A possible trade war between the United States and China is especially serious for the South Korean economy as it could directly or indirectly affect the country’s trade with them as well,’’ Se Sangyoung, an analyst at Kiwoom Securities, said.
Setting a downbeat tone for Asia, the Dow Jones in the United States yesterday shed 2.9%, the S&P 500 dropped 2.5% and the Nasdaq fell 2.4%.
As equities took a beating, the yen, often sought in times of market turmoil, rallied against the dollar.
‘‘In the longer run, protectionist policies touted by the United States could be watered down, in turn limiting the negative effect on trade and the global economy,’’ Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo, said, referring to the US decision to exempt some countries from steel and aluminium tariffs.
‘‘But until the United States makes such concessions, global stocks will be under pressure and the yen will appreciate, especially if China decides to confront the US measures.’’ — Reuters