Dow sinks 3% in sell-off on growth, trade worries

The Dow sank three percent yesterday afternoon as losses on Wall Street accelerated amid worries about the US economic outlook and scepticism over the US-China trade truce.

The Dow Jones Industrial Average had lost 3.0 per cent or 775 points, to 25,051.99 near 1845 GMT.

The broad-based S&P dropped 3.1 per cent to 2,704.81, while the tech-rich Nasdaq Composite Index slumped 3.5 per cent to 7,178.03.

Meanwhile, US President Donald Trump yesterday held out the possibility of an extension of the 90-day trade truce with China but warned he would revert to tariffs if the two sides could not resolve their differences.

Trump said his team of trade advisers led by China trade hawk US Trade Representative Robert Lighthizer would determine whether a “REAL deal” with China was possible.

“If it is, we will get it done,” Trump said in a Twitter post. “But if not remember, I am a Tariff Man.” The threat of an escalating trade war between the world’s two largest economies has loomed large over financial markets and the global economy for much of the year and investors greeted the ceasefire agreed by Trump and Chinese President Xi Jinping over the weekend with relief.

Markets, however, pulled back after Monday’s rally yesterday as doubts crept in over what could realistically get accomplished in the tight negotiating window.

By midday, international stock markets sank deeper into the red with the Dow Jones Industrial Average down over 2.7 pecent by 1840 GMT, the S&P 500 down 2.4 per cent and the pan-European STOXX 600 index losing 0.76 per cent.

The Republican president appeared to address one of the concerns by indicating he would not be opposed to extending the 90-day truce.