Trump’s China tariff threats send shares into red

LONDON

PROTECTIONIST threats by the US sent global stocks into the red yesterday, having sparked jitters over a global trade war.

The FTSE 100 ended the day down 1.2 per cent or 86.38 points at 6,952.59 points, while peers like the French Cac 40 and German Dax slumped 1.4% and 1.7%, respectively.

Wall Street stocks also tumbled, with the Dow Jones Industrial average falling 1.7% and the S&P 500 and Nasdaq Composite down around 1.2% each in the early hours of US trading.

It came as the White House said US president Donald Trump was preparing restrictions on Chinese investment and tariffs to punish Beijing for stealing American technology and putting pressure on US firms.

Fiona Cincotta, senior market analyst at City Index, said: “Trump’s announcement that he will place $50 billion of tariffs on China over IP theft has sent the markets spiralling lower.

“Fears that it could be harmful to the US economy and fears over the potential retaliation from China have left investors rotating out of stocks into less risky bonds.”

In currency markets, the pound was down nearly 0.2% against the dollar at around 1.411.

Sterling was lifted earlier by stronger than expected UK retail sales data and news that two of seven Bank of England Monetary Policy Committee (MPC) members voted to hike interest rates – which were ultimately kept on hold at 0.5%.

However, warnings by the MPC that a recent bout of snowfall could hit economic growth in the first quarter compounded worries over US protectionism, sending the pound lower.

Versus the euro, the pound was up just 0.05% at 1.146.

Brent crude prices were hit by profit-taking, with investors cashing in on a strong rise following an unexpected drop in US crude inventories reported a day earlier.

It sent the global benchmark price of oil down 1.2% at around $68.97 per barrel.

In UK stocks, Reckitt Benckiser jumped 269p to 5,895p after the firm announced that it had ended talks to acquire Pfizer’s consumer healthcare business.

Crest Nicholson dropped 13.4p to 453.8p. It came as nearly a third of its shareholders failed to back boss Stephen Stone’s appointment as executive chairman at its annual general meeting, amid concerns over his planned length of tenure and executive capacity.

Fashion chain Ted Baker plunged 380p to 2,556p after the group said unseasonable weather had knocked recent trading.

Stobart Group shares tumbled 9.5p to 220p on news that it is no longer going to bid for Flybe.

The biggest risers on the FTSE 100 were Reckitt Benckiser up 269p at 5,895p, Coca Cola HBC up 80p at 2,529p, Just Eat up 11.2p at 717.6p, and Smurfit Kappa Group up 42p at 3,036p.

The biggest fallers on the FTSE 100 were Micro Focus International down 60.8p at 911.8p, Schroders down 127p at 3,259p, Rio Tinto down 131p at 3,584p, and Glencore down 11.95p at 359.2p.

NEW YORK

US stocks slumped yesterday as President Donald Trump’s move to impose tariffs on up to $60 billion of Chinese imports drove fears about the impact on the global economy, fuelling the biggest percentage declines in Wall Street’s three major indexes since they entered correction territory six weeks ago.

Trump signed a presidential memorandum that will target the Chinese imports only after a consultation period. China will have space to respond, reducing the risk of immediate retaliation from Beijing.

But after equities recovered somewhat from earlier lows, selling pressure resumed on Wall Street heading into the close as investors fretted over the potential scale of US tariffs and possible impact on global trade.

“There’s too much negative sentiment right now,” said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston. “It’s possible that it will be rough sledding for a while. I don’t see anything on the horizon that will reassure people that things are just great.”

Major industrials slumped. Plane maker Boeing lost 5.2%, Caterpillar Inc dropped 5.7% and 3M lost 4.7%. The three were among the biggest drags on the Dow Jones Industrial Average. The S&P industrials sector plunged 3.28%.

The Dow Jones fell 724.42 points to 23,957.89, the S&P 500 lost 68.24 points to 2,643.69, and the Nasdaq Composite 178.61 points to 7,166.68.