Global stocks sank deep into the red on Friday amid the new customs tariffs imposed by the US President Donald Trump on Chinese imports worth 300 billion USD. The levy will take effect starting September 1.
The move breaks a truce in the long-running trade war between the world’s two largest economies, with investors fearful it could further disrupt global supply chains. China’s foreign ministry pushed back against Trump’s latest tariff threat on Friday morning, reportedly saying the world’s largest economy should give up its illusions, shoulder some responsibility and come back to the right track on resolving the trade war.
Asian markets recap
Asian stock markets suffered on Friday and ending the session with declined amid the further escalation of the global trade dispute. The US President Donald Trump announced new duties on Chinese imports last night, while the trade tensions between Japan and South Korea have also worsened.
In China, the mainland index Shanghai Composite lost 1.34% to 3,752.38 points, while Hong Kong’s benchmark Hang Seng fell even 2.15% to 26,972.43 points. After the US President Donald Trump announced new duties on Chinese imports on Thursday and threatening Beijing with further steps, there has been a significant decline in local exchanges.
In Japan, the blue-chip index Nikkei-225 fell by 2.11% to 21,087.16 points. The index of the Tokyo Stock Exchange was also adversely affected by the sharp rise in the Japanese yen against the US dollar. As a result, Japanese exports are on the rise. The best performers of the session on the Nikkei 225 were Casio Computer Co (+7.99%), Toho Co (+2.10%) and Konami Corp (+1.75%), while on the flipside were Furukawa Electric Co (-12.00%), Fujikura Ltd (-9.90%) and Asahi Kasei Corp (-7.80%).
In South Korea, the local index Kospi lost 1% after the Japanese government decided on Friday to remove the country from the “whitelist” from preferential treatment in trade deals. The restrictions mainly affect the chip makers Samsung and SK Hynix, as well as LG Display. Samsung shares lost 2% of its value.
Australian index S&P ASX 200 declined by 0.30% to 6,768.60 points. The stocks of Saracen Mineral Holdings Ltd gained 10.86%, while Resolute Mining Ltd added 10.71% and Newcrest Mining Ltd rose by 7.19%. However, the shares of Fortescue Metals Group Ltd (-6.51%), Graincorp Ltd (-5.36%) and Beach Energy Ltd (-5.24%) were the worst performers within the composition.
European markets mid-session recap
European stocks sank on Friday being threatened by the new customs tariffs imposed by the US President Donald Trump. The pan-European index Stoxx 600 fell by 1.97% to 380.03 points. Cyclical sectors including basic resources, banks and autos bore the brunt of the sell-off. VStoxx, which measures expectations for volatility, jumped to the highest since early June.
German index DAX 30 collapsed by 304.44 points, or 2.48%, to 11,948.71 points at 09:40 GMT. German 10-year government bond yields dropping more than three basis points to an all-time low of -0.529%. The stocks of Deutsche Bank declined by 1.32%, while Commerzbank edged lower by 3%. The shares of carmakers also fell sharply with Daimler wiped out 3.4%, while Volkswagen dropped by 4.1%. German financial services provider Allianz saw its shares slide 2.7% after reporting a 13.5% rise in second-quarter net profit last year.
French index CAC 40 is down by 2.63% to 5,411.29 points at mid-session trading. The stocks of Credit Agricole fell by 5.3% after the bank reported profits declined by 15% to 1.22 billion EUR on weak performance at its corporate and investment banking arm.
British blue-chip index FTSE 100 dropped by 1.88% to 7,441.99 points. Industrials Melrose and Ashtead, typically more exposed to global trade conditions, slumped 7.6% and 5%, respectively. RBS dropped 5%, its biggest one-day fall in nine months, as it warned that deteriorating economic conditions before Brexit were likely to derail next year’s profitability and cost targets. British Airways owner IAG, however, climbed 4% after reporting strong profit numbers for the first half of its key summer period.
Wall Street pre-session recap
US stock index futures were lower Friday morning after President Donald Trump said he would slap an additional 10% tariff on Chinese imports from next month.
At around 6:00 a.m. ET, Dow futures indicated a negative open of more than 80 points. Futures on the S&P and Nasdaq were both lower.
The investors will be closely monitoring the latest reading of nonfarm payrolls at 8:30 a.m. ET. Average hourly wages and unemployment rate figures for July will be released at the same time.
International trade data for June, factory orders for June and consumer sentiment for July will also be released Friday morning.