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US trade war: Dow recovers after China signals tariff retaliation – business live US trade war: Dow partially recovers after China signals tariff retaliation – as it happened
(35 minutes later)
Before we close up for the day, here is a summary of the main developments:
Stock markets in Asia fell heavily after China signalled it would retaliate against US tariffs. The Nikkei in Japan closed down 4.5%, while the Hang Seng in Hong Kong closed down 2.5%
European markets followed Asia lower, as investors worried about an impending US-China trade war
Falls on the FTSE 100 were limited by gains in Next, the index’s top performer despite its declaration that it had faced its toughest period in 25 years. Investors were relieved by a lack of nasty surprises from the retailer
MPs published a report demanding tougher rules on night flights before parliament gives Heathrow expansion the go-ahead
European leaders gathered in Brussels welcomed the EU’s temporary exemption from tariffs on US imports...
... but Belgium’s prime minister said America’s negotiating stance amounted to “a gun to our heads.” Donald Tusk, President of the European Council, called on the US to make the exemption permanent
Back in the UK, Bank of England policymaker Gertjan Vlieghe put households on notice for borrowing costs to rise faster than previously thought over the next few years
Wall Street opened slightly higher as investors more calmly digested China’s retaliation against US trade tariffs. The Dow was up 0.4%
That’s all from us for today. Thank you for following the blog and for all the comments.
Have a good weekend and please join us again on Monday. AM
Time for another look at the markets.
In the US, the Dow Jones is bucking the trend across global markets and continues to rise.
Here are the latest scores on Wall Street:
Dow Jones: +0.4% at 24,042
S&P 500: +0.2% at 2,648
And in Europe:
FTSE 100: +0.3% at 6,930
Germany’s DAX: -1.3% at 11,946
France’s CAC: -1% at 5,115
Italy’s FTSE MIB: -0.5% at 22,277
Spain’s IBEX: -1% at 9,398
Europe’s STOXX 600: -0.6% at 367
Brent crude oil prices have hit $70.03 a barrel, the highest since late January.Brent crude oil prices have hit $70.03 a barrel, the highest since late January.
The rise follows comments from the Saudi energy minister, who said OPEC countries would need to keep co-ordinating supply cuts with non-member countries, including Russia, into 2019.The rise follows comments from the Saudi energy minister, who said OPEC countries would need to keep co-ordinating supply cuts with non-member countries, including Russia, into 2019.
Back to the subject of trade wars...Back to the subject of trade wars...
Ana Boata, senior economist at Euler Hermes, the trade credit insurer, has done some number crunching on what the dispute between the US and China might mean:Ana Boata, senior economist at Euler Hermes, the trade credit insurer, has done some number crunching on what the dispute between the US and China might mean:
The trade feud between the US and China could lead to potential export losses of $15.7bn. The US’ 25% tariff on imports for $60bn Chinese goods might cost China $15bn in export losses, while retaliatory Chinese tariffs on $3bn of US agrifood and steel products could see US exporters lose up to $700m.The trade feud between the US and China could lead to potential export losses of $15.7bn. The US’ 25% tariff on imports for $60bn Chinese goods might cost China $15bn in export losses, while retaliatory Chinese tariffs on $3bn of US agrifood and steel products could see US exporters lose up to $700m.
We expect vehicles and electronics to be next on the target list, while their attentions might also turn to financial services and intellectual property.We expect vehicles and electronics to be next on the target list, while their attentions might also turn to financial services and intellectual property.
US markets are slightly up after the opening bell on Wall Street:US markets are slightly up after the opening bell on Wall Street:
Dow Jones: +0.3% at 24,029Dow Jones: +0.3% at 24,029
S&P 500: +0.2% at 2,649S&P 500: +0.2% at 2,649
Nasdaq: +0.1% at 7,172Nasdaq: +0.1% at 7,172
Bank of England rate-setter Gertjan Vlieghe has put households on notice for borrowing costs to rise faster than previously thought over the next few years.Bank of England rate-setter Gertjan Vlieghe has put households on notice for borrowing costs to rise faster than previously thought over the next few years.
Using a speech in Birmingham, the member of the Bank’s monetary policy committee said he saw a need for one or two rate hikes per year over the next few years, in comments likely to be seen as putting the Bank on track for raising the cost of borrowing in May.Using a speech in Birmingham, the member of the Bank’s monetary policy committee said he saw a need for one or two rate hikes per year over the next few years, in comments likely to be seen as putting the Bank on track for raising the cost of borrowing in May.
One of the seven MPC members who voted to leave rates unchanged on Thursday, he said he was increasingly confident that wage growth in Britain was just around the corner. “The data have shifted further in the direction that warrants a continuation of the removal of monetary stimulus,” he said.One of the seven MPC members who voted to leave rates unchanged on Thursday, he said he was increasingly confident that wage growth in Britain was just around the corner. “The data have shifted further in the direction that warrants a continuation of the removal of monetary stimulus,” he said.
Although he warned there was uncertainty about the strength of the economy, particularly as the UK leaves the European Union, Vlieghe said recent surveys and figures from the jobs market had convinced him of the need for higher interest rates.Although he warned there was uncertainty about the strength of the economy, particularly as the UK leaves the European Union, Vlieghe said recent surveys and figures from the jobs market had convinced him of the need for higher interest rates.
But despite the good news for workers from rising pay, he warned there was also a lower “new normal” for wage growth, as pay rises are likely to be constrained by poor levels of productivity growth in the UK.But despite the good news for workers from rising pay, he warned there was also a lower “new normal” for wage growth, as pay rises are likely to be constrained by poor levels of productivity growth in the UK.
The sluggish increase in the efficiency of British workers seen since the financial crisis - which has been poorer than other advanced economies - could mean average annual wage rises worth about 3% per year compared to about 4% previously, he said.The sluggish increase in the efficiency of British workers seen since the financial crisis - which has been poorer than other advanced economies - could mean average annual wage rises worth about 3% per year compared to about 4% previously, he said.
Andrew Hunter, US economist at Capital Economics, says the durable goods data suggests business investment is in “healthy shape”.Andrew Hunter, US economist at Capital Economics, says the durable goods data suggests business investment is in “healthy shape”.
The 3.1% rebound in durable goods orders in February was encouraging, even if that headline figure was boosted by the more volatile transport category. Equipment investment still appears to have slowed in the first quarter overall, but the data suggest that won’t last for long.The 3.1% rebound in durable goods orders in February was encouraging, even if that headline figure was boosted by the more volatile transport category. Equipment investment still appears to have slowed in the first quarter overall, but the data suggest that won’t last for long.
The 26% in commercial aircraft orders was in line with the stronger orders reported by Boeing last month, while orders for defence aircraft also posted a big rebound. The 1.6% gain in motor vehicle orders was, however, stronger than expected given the recent declines in sales.The 26% in commercial aircraft orders was in line with the stronger orders reported by Boeing last month, while orders for defence aircraft also posted a big rebound. The 1.6% gain in motor vehicle orders was, however, stronger than expected given the recent declines in sales.
Overall, business equipment investment still appears to have slowed in the first quarter, probably to between 6% and 8% annualised. But some slowdown appeared inevitable after the double-digit gains in the second half of last year and, in any case, the latest business surveys suggest that the outlook over the coming months remains bright.Overall, business equipment investment still appears to have slowed in the first quarter, probably to between 6% and 8% annualised. But some slowdown appeared inevitable after the double-digit gains in the second half of last year and, in any case, the latest business surveys suggest that the outlook over the coming months remains bright.
On a data-light Friday, we’ve just had some stronger-than-expected numbers out of the US.On a data-light Friday, we’ve just had some stronger-than-expected numbers out of the US.
Orders for durable goods - items ranging from kitchen appliances to aircraft that are expected to last three years or more - jumped 3.1% in February, as demand for transport equipment rose by 7.1%.Orders for durable goods - items ranging from kitchen appliances to aircraft that are expected to last three years or more - jumped 3.1% in February, as demand for transport equipment rose by 7.1%.
The headline number was expected to come in at 1.5%, and growth of 3.1% followed a 3.5% fall in January, the commerce department said.The headline number was expected to come in at 1.5%, and growth of 3.1% followed a 3.5% fall in January, the commerce department said.
Orders of non-defence related capital capital goods excluding aircraft - considered a bellwether for business spending plans - rose 1.8% last month. It was the biggest gain in five months and beat expectations of a 0.8% increase.Orders of non-defence related capital capital goods excluding aircraft - considered a bellwether for business spending plans - rose 1.8% last month. It was the biggest gain in five months and beat expectations of a 0.8% increase.
#UnitedStates Durable Goods Orders month-on-month at 3.1% https://t.co/G4gyxTou0U pic.twitter.com/xreKVSkHpH#UnitedStates Durable Goods Orders month-on-month at 3.1% https://t.co/G4gyxTou0U pic.twitter.com/xreKVSkHpH
Joseph Stiglitz, the Nobel prize-winning economist, says China can’t be seen to show weakness against a “bully” like President Trump.Joseph Stiglitz, the Nobel prize-winning economist, says China can’t be seen to show weakness against a “bully” like President Trump.
He told Bloomberg Television in Beijing:He told Bloomberg Television in Beijing:
Particularly when you have a bully like Trump, it would not be good to respond in a weak way.Particularly when you have a bully like Trump, it would not be good to respond in a weak way.
We know about appeasement from Munich. It’s a different kind of a war but in a trade war, appeasement could lead to more and more demands.We know about appeasement from Munich. It’s a different kind of a war but in a trade war, appeasement could lead to more and more demands.
Stiglitz, a Columbia University economics professor, said China was in a better position than the US to withstand a trade war:Stiglitz, a Columbia University economics professor, said China was in a better position than the US to withstand a trade war:
[China is] sitting on $3 trillion of reserves that it can use to help those adversely affected. In the United States we don’t have an economic framework that is able to respond to the particular places that will be affected by a trade war. The fiscal resources of the United States are strained.[China is] sitting on $3 trillion of reserves that it can use to help those adversely affected. In the United States we don’t have an economic framework that is able to respond to the particular places that will be affected by a trade war. The fiscal resources of the United States are strained.
China Can’t Be Seen as Weak Against ‘Bully’ Trump, Stiglitz Says https://t.co/GMSKi92q29China Can’t Be Seen as Weak Against ‘Bully’ Trump, Stiglitz Says https://t.co/GMSKi92q29
US futures have reversed earlier losses suggesting Wall Street could open slightly higher.US futures have reversed earlier losses suggesting Wall Street could open slightly higher.
Dow Jones futures are up about 0.1% while S&P futures are up 0.2%.Dow Jones futures are up about 0.1% while S&P futures are up 0.2%.
Trevor Greetham at investment company Royal London Asset Management says now could be the time to buy shares.Trevor Greetham at investment company Royal London Asset Management says now could be the time to buy shares.
In a note titled “the Donald dip becomes a Trump slump”, he says:In a note titled “the Donald dip becomes a Trump slump”, he says:
Stock markets have fallen back sharply towards their February lows. While the initial bout of market weakness this year was blamed on rising wage inflation and fears of higher interest rates, this time round it’s in reaction to President Trump’s announcement of a range of tariffs on imports from China.Stock markets have fallen back sharply towards their February lows. While the initial bout of market weakness this year was blamed on rising wage inflation and fears of higher interest rates, this time round it’s in reaction to President Trump’s announcement of a range of tariffs on imports from China.
Although equities have taken a battering since the market melt-up at the turn of the year when US corporate tax cuts were the focus, these moves aren’t so unexpected. It’s quite normal for markets to remain edgy for a month or two after such a sharp reversal and a move back towards the initial lows is not surprising.Although equities have taken a battering since the market melt-up at the turn of the year when US corporate tax cuts were the focus, these moves aren’t so unexpected. It’s quite normal for markets to remain edgy for a month or two after such a sharp reversal and a move back towards the initial lows is not surprising.
Given this weakness, we’re once again adding to equities and remain overweight stocks in the multi asset funds we manage. It’s noteworthy that commodity markets haven’t reacted particularly badly to the tariffs spat and emerging market equities are outperforming in the sell-off, both signs that global growth remains on track.Given this weakness, we’re once again adding to equities and remain overweight stocks in the multi asset funds we manage. It’s noteworthy that commodity markets haven’t reacted particularly badly to the tariffs spat and emerging market equities are outperforming in the sell-off, both signs that global growth remains on track.
With profits growing and interest rates still below inflation in major developed economies, the fundamentals and outlook remain positive.With profits growing and interest rates still below inflation in major developed economies, the fundamentals and outlook remain positive.
Our delegation @EU_aluminium meeting Commissioner @MalmstromEU today on #Section232 Fruitful and constructive debate about the way forward. #Trade #aluminium pic.twitter.com/RxhaouJQIfOur delegation @EU_aluminium meeting Commissioner @MalmstromEU today on #Section232 Fruitful and constructive debate about the way forward. #Trade #aluminium pic.twitter.com/RxhaouJQIf
Cecilia Malmstrom, the EU’s trade commissioner, has outlined her view on the bloc’s temporary exemption from US tariffs in a series of tweets.Cecilia Malmstrom, the EU’s trade commissioner, has outlined her view on the bloc’s temporary exemption from US tariffs in a series of tweets.
The exemption was agreed after Malmstrom travelled to Washington for talks with US trade representative Robert Lighthizer and commerce secretary Wilbur Ross.The exemption was agreed after Malmstrom travelled to Washington for talks with US trade representative Robert Lighthizer and commerce secretary Wilbur Ross.
...following discussions with @SecretaryRoss and @USTradeRep in Washington D.C. and Brussels. The EU is not the source of the global problems in the steel and aluminium sectors... 2/4...following discussions with @SecretaryRoss and @USTradeRep in Washington D.C. and Brussels. The EU is not the source of the global problems in the steel and aluminium sectors... 2/4
Preserving the global rules-based system for trade is what we should all be working towards. The EU will also keep our options open in terms of preserving our rights in the @WTO for further action. 4/4Preserving the global rules-based system for trade is what we should all be working towards. The EU will also keep our options open in terms of preserving our rights in the @WTO for further action. 4/4
Over in Brussels, where EU leaders are gathered for talks, positivity over the bloc’s 40-day exemption on tariffs, granted by Washington, appears to be wearing thin.Over in Brussels, where EU leaders are gathered for talks, positivity over the bloc’s 40-day exemption on tariffs, granted by Washington, appears to be wearing thin.
Belgium’s Prime Minister, Charles Michel, said he was not impressed at the suspension of tariffs until 1 May:Belgium’s Prime Minister, Charles Michel, said he was not impressed at the suspension of tariffs until 1 May:
I have the impression that the US leader wants to negotiate with the European Union by putting a gun to our head.I have the impression that the US leader wants to negotiate with the European Union by putting a gun to our head.
That’s a strange way to negotiate with an ally.That’s a strange way to negotiate with an ally.
Here is our latest market roundup as China reacts to US steel tariffs:Here is our latest market roundup as China reacts to US steel tariffs:
Peter Rosenstreich, a trader at Swissquote, the online bank, says markets are overreacting to “trade war hype”:Peter Rosenstreich, a trader at Swissquote, the online bank, says markets are overreacting to “trade war hype”:
Markets are overreacting to President Donald Trump’s threats of a trade war. Trump is using the issue for political gain, rather than actual trade repositioning.Markets are overreacting to President Donald Trump’s threats of a trade war. Trump is using the issue for political gain, rather than actual trade repositioning.
This will give him a nice bullet point for stump speeches in the 2020 campaign, but he gains little from sparking a full-blown trade conflict. Besides, the World Trade Organization is still in action.This will give him a nice bullet point for stump speeches in the 2020 campaign, but he gains little from sparking a full-blown trade conflict. Besides, the World Trade Organization is still in action.
Craig Erlam at online trading site Oanda, says investors are concerned that an impending trade war will derail the global economy:Craig Erlam at online trading site Oanda, says investors are concerned that an impending trade war will derail the global economy:
For a person who’s been obsessed with stock market gains since his election victory 16 months ago, US President Donald Trump doesn’t appear too concerned about the impact his tariffs are having at the moment.For a person who’s been obsessed with stock market gains since his election victory 16 months ago, US President Donald Trump doesn’t appear too concerned about the impact his tariffs are having at the moment.
Trump may be prepared to add the European Union to the list of those that are temporarily exempt from the tariffs – with Canada, Mexico and Australia having been allowed similar exemptions – but that has barely cushioned the blow for investors.Trump may be prepared to add the European Union to the list of those that are temporarily exempt from the tariffs – with Canada, Mexico and Australia having been allowed similar exemptions – but that has barely cushioned the blow for investors.
Understandably, the prospect of a trade war between the world’s two largest economies is not particularly desirable for investors. The global economy is finally starting the tick along nicely after a decade of efforts to repair the damage of the global financial crisis and the issues that followed and now we’re potentially having to deal with an entirely self-inflicted and avoidable problem.Understandably, the prospect of a trade war between the world’s two largest economies is not particularly desirable for investors. The global economy is finally starting the tick along nicely after a decade of efforts to repair the damage of the global financial crisis and the issues that followed and now we’re potentially having to deal with an entirely self-inflicted and avoidable problem.
Losses have widened across European market as investors digest the prospect of a US-China trade war.Losses have widened across European market as investors digest the prospect of a US-China trade war.
Here are the latest scores:Here are the latest scores:
FTSE 100: -1% at 6,884FTSE 100: -1% at 6,884
Germany’s DAX: -1.9% at 11,877Germany’s DAX: -1.9% at 11,877
France’s CAC: -1.9% at 5,068France’s CAC: -1.9% at 5,068
Italy’s FTSE MIB: -1.7% at 22,008Italy’s FTSE MIB: -1.7% at 22,008
Spain’s IBEX: -1.5% at 9,345Spain’s IBEX: -1.5% at 9,345
Europe’s STOXX 600: -1.5% at 364Europe’s STOXX 600: -1.5% at 364
Wall Street is also expected to open down:Wall Street is also expected to open down:
Dow Jones futures: -0.7%Dow Jones futures: -0.7%
S&P futures: -0.5%S&P futures: -0.5%
Nasdaq futures: -0.9%Nasdaq futures: -0.9%