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Oil, stocks slide on Trump's new trade salvo

China warned it was fully prepared to respond with a "fierce counter strike" of fresh trade measures

Reuters 

oil rig

Crude and global equity tumbled on Friday after U.S. upped the ante in a trade dispute with China, reviving investor jitters about the impact a tariff war could have on the world

MSCI's gauge of worldwide equity fell more than 1 percent and stocks on Wall Street skidded more than 2 percent after Trump threatened late on Thursday to add another $100 billion of tariffs on Chinese goods.

warned it was fully prepared to respond with a "fierce counter strike" of fresh trade measures if the follows through on Trump's latest threat.

The U.S. equity rout picked up during a speech by Federal Reserve in on the U.S. Powell said it was too early to tell if the threatened tariffs would materialise or the effect they might have.

"What Powell is signalling to market participants is that the Fed is not swayed or rattled by equity market volatility at this point. That's the reason for the additional selling pressure," said Chad Morganlander, a at in Florham Park,

"The Fed has the intestinal fortitude to wait until it creeps into credit conditions and causes financial stress," he said.

The pan-European index <.FTEU3>, which closed before Powell's speech, fell 0.4 percent but ended the week 1.15 percent higher.

The Europe index <.STOXX> of companies in 17 European countries fell 0.35 percent, with the trade-exposed auto sector <.SXAP> the leading sectoral loser, down 1.7 percent.

Earlier in Asia, Japan's Nikkei <.N225> nudged down slightly to regain a measure of calm after an initial knee-jerk reaction to Trump's latest tariff proposal.

Defensive stocks such as utilities or telecoms were among a handful of European sectors to end the day in higher.

MSCI's all-country index <.MIWD00000PUS> of stock performance in 47 countries fell 1.2 percent, led lower by Apple, Microsoft, and - the same as on the benchmark index.

On Wall Street, the Dow Jones Industrial Average <.DJI> closed down 572.46 points, or 2.34 percent, to 23,932.76. The <.SPX> lost 58.37 points, or 2.19 percent, to 2,604.47 and the <.IXIC> dropped 161.44 points, or 2.28 percent, to 6,915.11.

The market's decline is due more to its current vulnerable state than the prospect of a trade war, said Jim Paulsen, at in

"It's got higher values; financial liquidity is contracting. You came into the year with a little too much optimism. You got rising rates going on, you got rising inflation fears," he said.

Powell said will likely need to keep raising interest rates to keep inflation under control.

A weak U.S. unemployment report, which nonetheless highlighted underlying labour market strength, helped push prices higher as the created the fewest jobs in six months in March.

prices tumbled, with U.S. crude falling more than 2 percent.

Brent crude futures fell $1.22 to settle at $67.11 a barrel, while U.S. Intermediate (WTI) crude futures settled down $1.48 at $62.06.

and euro zone government bond yields dipped as the trade spat raised the prospect of a full-blown trade war between the world's two largest economies.

The yield on 10-year debt, the euro zone benchmark, dipped 2.7 basis points in late trading to 0.494 percent, erasing much of Thursday's rise .

Benchmark 10-year notes last rose 15/32 in price to push yields down to 2.7753 percent.

Mike Terwilliger, of for the Resource Credit Income Fund, said nearly every news event seems to register on the market's Richter scale, though investors have been dealing with some relatively weighty challenges this year.

"The recent decline in Treasuries is largely 'Tweet related' versus some fundamental shift in the view of inflation or economic growth," he said.

The dollar index <.DXY> fell 0.37 percent, with the euro up 0.36 percent to $1.2282. The Japanese yen firmed 0.45 percent at 106.90 per dollar.

U.S. gold futures for June delivery settled up 0.6 percent at $1,336.10 an ounce.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sat, April 07 2018. 02:17 IST
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