LONDON: Fears of a global trade war hit equity prices on Friday as the price of crude shot above $70 per barrel on the appointment of a hawkish US national security advisor.
Beijing responded to US President Donald Trump’s announcement on Thursday of levies on up to $60 billion of Chinese imports from by saying it was “not afraid of a trade war”, and released a list of potential tariffs on $3.0 billion worth of US goods, from pork to fruits and wine and including some steel and aluminium goods.
The news hammered stocks in Asia, with European stocks also finishing down, if off their worst lows of the day.
After falling sharply on Thursday after Trump’s announcement, US stocks pushed higher in early trading on Friday. The rally lost steam, however, with the Dow essentially flat in midday trading.
“A tidal wave of risk aversion engulfed financial markets on Friday,” FXTM analyst Lukman Otunuga said, branding Trump’s move as “bold and frightening”.
Market analyst Jasper Lawler at London Capital Grup said: “China’s three billion dollar response to US tariffs is the realisation of the tit-for-tat trade wars that investors have been fearing.”
The developments have fuelled fears that a strong recovery in the world economy could be thrown off course as the tariffs crimp consumption and production.
But “after plummeting in early trading, stocks mostly recovered in the afternoon as investors came to realise China’s tariff response could have been a lot more severe,” said Lawler.
Trade war fears sent many investors piling into the safe haven yen. The dollar dropped below 105 yen for the first time since Trump was elected president in November 2016. The greenback was down also against the euro.
Source: Brecorder.com
