Wall Street set to sink as China trade spat intensifies

By Sruthi Shankar

(Reuters) - Wall Street was set to open sharply lower on Friday after the United States announced tariffs on $50 billion worth of Chinese goods, spurring a promise of immediate and equivalent retaliation from Beijing.

President Donald Trump said in a statement that a 25 percent tariff would be imposed on an initial list of strategically important imports from China from July 6 and vowed further measures if Beijing struck back.

China's Commerce Ministry said it planned to impose tariff measures of similar size and intensity response.

Global financial markets have struggled since February in the face of signs Washington and Beijing were headed toward a trade war after several rounds of negotiations failed to resolve U.S. complaints over Chinese industrial policy, market access and a $375 billion trade gap.

"It has gotten investors nervous," Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"It's going to probably mean a cautious and bumpy ride for the stock markets."

Shares of manufacturers Boeing and Caterpillar were down more than 1.2 percent in premarket trading, and car makers Tesla and General Motors fell 1.1 percent and 0.39 percent, respectively.

Investors are also weighing the impact of tightening monetary policy by central banks on the equities market.

The U.S. Federal Reserve increased its key interest rate for the second time this year on Wednesday and hinted at the possibility of two more hikes by the end of 2018.

The European Central Bank weighed in on Thursday to say it would end its bond-purchase program at year-end, even if any interest rate hike was still distant.

At 8:38 a.m. ET, Dow e-minis were down 174 points, or 0.69 percent. S&P 500 e-minis were down 12.75 points, or 0.46 percent and Nasdaq 100 e-minis were down 21.5 points, or 0.3 percent.

NXP Semiconductors rose 1.8 percent after a media report that Beijing had already approved Qualcomm Inc's proposed $44 billion acquisition of the chipmaker. Qualcomm was up 0.4 percent. Sources close to the talks have told Reuters that China is yet to approve.

Adobe shares dropped 3.3 percent after the company projected third-quarter revenue that fell slightly below estimates. Its shares have run up more than 47 percent so far this year.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva)