Foreign Trade

Stocks Fall Sharply as U.S.-China Trade Conflict Heats Up

from The Wall Street Journal,

European and Asian markets fall amid escalating trade tensions

The global equities swoon deepened Friday in Europe and Asia as market participants dumped stocks amid escalating trade tensions. The Stoxx Europe 600 fell 1.5% in morning trading—on track for its lowest close in 13 months—following a 4.5% drop in Japan’s Nikkei and declines of 2% to 4% in Hong Kong, South Korea, Australia and Shanghai. Futures suggested U.S. stocks would open lower despite the passing of a $1.3 trillion spending bill Friday to avert a government shutdown. The S&P 500 was poised to edge down 0.6%, while Nasdaq -100 futures were down 1%. The selloff in stocks accelerated Thursday after the Trump administration said it would impose tariffs on tens of billions of dollars of Chinese imports on top of duties on steel and aluminum imports. China’s commerce ministry responded Friday announcing it would levy tariffs against $3 billion worth of U.S. goods including pork and recycled aluminum.

“The market is so fixated on the potential effects of tariffs that it’s overshadowing anything else that’s occurring,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company. “Overall, I still think the risk of a large trade war, while probably bigger than a year ago, is still not large enough to derail the broader economic story,” he said, noting that he views many of the U.S. plans as likely negotiation tactics.

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