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US trade war: global shares plummet as China signals retaliation – business live US trade war: global shares plummet as China signals tariff retaliation – business live
(35 minutes later)
EU leaders meeting in Brussels have welcomed President Trump’s decision to row back on plans to impose tariffs on European steel.
Washington said on Thursday tariffs would be suspended for the EU - America’s biggest trading partner - Argentina, Australia, Brazil, Canada, Mexico and South Korea. The tariffs are suspended until 1 May as discussions continue.
A spokesman for the French government said this morning:
Europe has clearly stated its intention to riposte and enter a trade war ... it’s a good thing that President Trump changed his mind on tariff increases.
Germany’s economy minister, Peter Altmaier, said:
I am very pleased that we have avoided a situation for the German steel and aluminium industry and its workers, that could have led to great uncertainty.
We don’t want further unilateral measures, rather we want sensible agreements.
European commissioner Pierre Moscovici kept it simple:
This is progress, let’s keep talking.
Theresa May has also welcomed the decision.
Next is one of Britain’s biggest retailers and the latest results for the year ending January 2018 reflect a tough trading backdrop on the UK’s high streets.
Pre-tax profits fell 8% to £726m, reflecting a 7.9% fall in sales in its shops. The drop was not enough to offset a 9% rise in online sales.
Lord Wolfson, chief executive, said it had been an “uncomfortable year”, adding:
In many ways 2017 was the most challenging year we have faced for 25 years. A difficult clothing market coincided with self-inflicted product ranging errors and omissions.
At the same time, the business has had to manage the costs, systems requirements and opportunities of an accelerating structural shift in spending from retail stores to online.
In the end our profits were in line with the forecast we issued in January 2017 and the company goes into the coming year in good financial health.
However, investors are not perturbed by the fall in profits, given they were in line with expectations.
In the absence of any nasty shocks, Next is now the biggest riser on the FTSE 100, up 3.3% at £47.83.
The FTSE 100 has fallen less than expected in early trading, currently down 33 points or 0.5% at 6,919.The FTSE 100 has fallen less than expected in early trading, currently down 33 points or 0.5% at 6,919.
The losses have been limited by GlaxoSmithKline and Next, which are the top two risers this morning:The losses have been limited by GlaxoSmithKline and Next, which are the top two risers this morning:
Shares in the pharma giant GSK are being boosted by the decision to withdraw its interest in buying Pfizer’s consumer healthcare business.Shares in the pharma giant GSK are being boosted by the decision to withdraw its interest in buying Pfizer’s consumer healthcare business.
The rise in Next’s shares follow the publication of its annual results, which show an 8% fall in pre-tax profits. More on that soon.The rise in Next’s shares follow the publication of its annual results, which show an 8% fall in pre-tax profits. More on that soon.
And we’re off... Europe’s main markets have opened down, as predicted:And we’re off... Europe’s main markets have opened down, as predicted:
FTSE 100: -0.5%FTSE 100: -0.5%
Germany’s DAX: -0.9%Germany’s DAX: -0.9%
France’s CAC: -0.9%France’s CAC: -0.9%
Italy’s FTSE MIB: -1.2%Italy’s FTSE MIB: -1.2%
Spain’s IBEX: -0.9%Spain’s IBEX: -0.9%
Tougher rules should be imposed on night flights and keeping costs down for passengers before parliament approves a third runway at Heathrow.Tougher rules should be imposed on night flights and keeping costs down for passengers before parliament approves a third runway at Heathrow.
That is the verdict of the transport select committee in a report published overnight.That is the verdict of the transport select committee in a report published overnight.
Concerns are centred on the environmental impact of Heathrow expansion, as Lilian Greenwood, the committee’s chair, explains:Concerns are centred on the environmental impact of Heathrow expansion, as Lilian Greenwood, the committee’s chair, explains:
At present, the draft national policy statement does not guarantee that passengers will be protected from the cost risks associated with the scheme. The secretary of state must set out how airport charges will be held down.At present, the draft national policy statement does not guarantee that passengers will be protected from the cost risks associated with the scheme. The secretary of state must set out how airport charges will be held down.
She added:She added:
Thousands of people across London could be exposed to worse levels of noise, air quality and traffic congestion – there must be sufficient measures to protect or compensate them.Thousands of people across London could be exposed to worse levels of noise, air quality and traffic congestion – there must be sufficient measures to protect or compensate them.
Read our full story on the report:Read our full story on the report:
European markets are expected to follow Asia lower when they open in about 20 minutes.European markets are expected to follow Asia lower when they open in about 20 minutes.
Here are the opening calls from traders at the spread-betting firm IG:Here are the opening calls from traders at the spread-betting firm IG:
European Indices:#FTSE 6900 -0.76%#DAX 11945 -1.28%#CAC 5098 -1.34%#MIB 22151 -1.10%#IBEX 9380 -1.13%European Indices:#FTSE 6900 -0.76%#DAX 11945 -1.28%#CAC 5098 -1.34%#MIB 22151 -1.10%#IBEX 9380 -1.13%
Jasper Lawler at London Capital Group says the stand-off between the US and China is sending a chill through the markets:Jasper Lawler at London Capital Group says the stand-off between the US and China is sending a chill through the markets:
Despite Trump claiming that the tariffs would make the US “a much stronger nation” the markets are keenly aware that there will be no winners in a trade war.Despite Trump claiming that the tariffs would make the US “a much stronger nation” the markets are keenly aware that there will be no winners in a trade war.
Worse still, the tit for tat responses that we are now seeing - and can expect to see more of - between the world’s two largest economies, is damaging for their economies and the broader global economy.Worse still, the tit for tat responses that we are now seeing - and can expect to see more of - between the world’s two largest economies, is damaging for their economies and the broader global economy.
Good morning if you’re just joining us – and hello again if you’ve already been reading.Good morning if you’re just joining us – and hello again if you’ve already been reading.
It’s been a very busy day so far on the stock and currency markets so here’s a roundup of what’s happened:It’s been a very busy day so far on the stock and currency markets so here’s a roundup of what’s happened:
Fears of a global trade war have intensified after China signalled it would retaliate against US tariffs.Fears of a global trade war have intensified after China signalled it would retaliate against US tariffs.
Beijing said it didn’t want a trade war and urged the US to pull back from the brink. But it said it wasn’t afraid of one and has drawn up a list of more than 100 US products that it will hit with duties if Donald Trump goes ahead with his tariffs on Chinese steel and aluminium.Beijing said it didn’t want a trade war and urged the US to pull back from the brink. But it said it wasn’t afraid of one and has drawn up a list of more than 100 US products that it will hit with duties if Donald Trump goes ahead with his tariffs on Chinese steel and aluminium.
Stock markets in Asia have fallen sharply. The Nikkei in Japan closed down 4.51% and in Hong Kong and Shanghai, where trading is still going on, the markets are down 3.18% and 3.4%.Stock markets in Asia have fallen sharply. The Nikkei in Japan closed down 4.51% and in Hong Kong and Shanghai, where trading is still going on, the markets are down 3.18% and 3.4%.
European markets are set to open down as well with FTSE 100 on course to drop 0.74%European markets are set to open down as well with FTSE 100 on course to drop 0.74%
Key industrial commodities have been hit as well, with the iron ore futures price down 5% and copper at a three-month lowKey industrial commodities have been hit as well, with the iron ore futures price down 5% and copper at a three-month low
The yen is up as the US dollar continued to slump. The pound rose against the greenback to $1.415.The yen is up as the US dollar continued to slump. The pound rose against the greenback to $1.415.
For a roundup here’s our news story:For a roundup here’s our news story:
Spreadbetters are forecasting that the FTSE100 will lose about 0.8% when trading starts in London in an hour or so.Spreadbetters are forecasting that the FTSE100 will lose about 0.8% when trading starts in London in an hour or so.
#FTSE100 Index called to open -70pts at 6890 pic.twitter.com/cu9OuMaxGv#FTSE100 Index called to open -70pts at 6890 pic.twitter.com/cu9OuMaxGv
Bourses are about to open in Europe though, and they too are expected to take a hefty hit. These are the predicted openings:Bourses are about to open in Europe though, and they too are expected to take a hefty hit. These are the predicted openings:
Germany’s DAX -1.6%Germany’s DAX -1.6%
France’s CAC -1.5%France’s CAC -1.5%
S&P 0.6%S&P 0.6%
The Kospi index in Seoul, South Korea has closed down 3.29%, or 82 points at 2,414.The Kospi index in Seoul, South Korea has closed down 3.29%, or 82 points at 2,414.
The country has a large export industry and stands to lose out if there is a trade war between the US and China. It’s largest trading partner is China and the US is its second biggest.The country has a large export industry and stands to lose out if there is a trade war between the US and China. It’s largest trading partner is China and the US is its second biggest.
SE Kim, an employee at a construction company in Seoul, told AP:SE Kim, an employee at a construction company in Seoul, told AP:
I’m worried that it would affect the national economy. If the US imposes tariffs on China like that, I think there would be some damage on us in the long term as well.I’m worried that it would affect the national economy. If the US imposes tariffs on China like that, I think there would be some damage on us in the long term as well.
It’s been a pretty rough few days on the financial markets. Facebook’s woes are punishing the tech sector, the US Fed hiked interests rates on Wednesday and the Bank of England rate setters were split 7-2 in favour of keeping rates on hold. Only a matter of time before that changes, many believe.It’s been a pretty rough few days on the financial markets. Facebook’s woes are punishing the tech sector, the US Fed hiked interests rates on Wednesday and the Bank of England rate setters were split 7-2 in favour of keeping rates on hold. Only a matter of time before that changes, many believe.
And now the prospect of a trade war.And now the prospect of a trade war.
Michael Hewson at CMC Markets says the potential for a big selloff in the tech sector is especially worrying:Michael Hewson at CMC Markets says the potential for a big selloff in the tech sector is especially worrying:
Investors should be rightly fearful of [the Facebook selloff] given that the tech sector has driven most of the gains in US markets over the past 18 months. A meltdown in this sector has the potential to get very messy indeed, with related ripple out effects.Investors should be rightly fearful of [the Facebook selloff] given that the tech sector has driven most of the gains in US markets over the past 18 months. A meltdown in this sector has the potential to get very messy indeed, with related ripple out effects.
This week’s Fed decision to raise rates and tweak its guidance appears to have cut the rug out further from under the US dollar as policymakers adopted a safety first approach to future rate rise expectations, leaving them unchanged for this year. This appears to have caught markets off balance sending bond yields sharply lower and the US 10 and 2-year spread back towards its previous lows, though some of these declines could also be attributed to concerns about tariffs.This week’s Fed decision to raise rates and tweak its guidance appears to have cut the rug out further from under the US dollar as policymakers adopted a safety first approach to future rate rise expectations, leaving them unchanged for this year. This appears to have caught markets off balance sending bond yields sharply lower and the US 10 and 2-year spread back towards its previous lows, though some of these declines could also be attributed to concerns about tariffs.
#SeaOfRed #nikkei down 4.51% #devastating pic.twitter.com/BjIHpOoCZa#SeaOfRed #nikkei down 4.51% #devastating pic.twitter.com/BjIHpOoCZa
#SP500 -2,52%, #Nikkei -4,4%, #Shanghai Comp -4%. pic.twitter.com/xjqoHtLdoa#SP500 -2,52%, #Nikkei -4,4%, #Shanghai Comp -4%. pic.twitter.com/xjqoHtLdoa
It’s worth looking again at the statement from the Chinese commerce ministry earlier today.It’s worth looking again at the statement from the Chinese commerce ministry earlier today.
It said that China did not want a trade war, but it was “not afraid” of having one.It said that China did not want a trade war, but it was “not afraid” of having one.
China doesn’t hope to be in a trade war, but is not afraid of engaging in one. China hopes the United States will pull back from the brink, make prudent decisions, and avoid dragging bilateral trade relations to a dangerous place.China doesn’t hope to be in a trade war, but is not afraid of engaging in one. China hopes the United States will pull back from the brink, make prudent decisions, and avoid dragging bilateral trade relations to a dangerous place.
The interesting thing here is that it does leave a bit of wriggle room so might not necessarily result in an all-out trade war as noted by some of our experts. The memorandum signed by Trump on Thursday allows for a 30-day consultation period that only starts once a list of Chinese goods to be taxed is published. Trump said he views the Chinese as “a friend”, and both sides are in talks so it could be resolved.The interesting thing here is that it does leave a bit of wriggle room so might not necessarily result in an all-out trade war as noted by some of our experts. The memorandum signed by Trump on Thursday allows for a 30-day consultation period that only starts once a list of Chinese goods to be taxed is published. Trump said he views the Chinese as “a friend”, and both sides are in talks so it could be resolved.
The commerce industry said China was considering measures in two stages: a 15% hit on 120 US products, including steel pipes, dried fruit and wine worth $977m. China’s list also included close to 80 fruit and nut products. Then it would levy 25% on $1.99bn of pork and recycled aluminium.The commerce industry said China was considering measures in two stages: a 15% hit on 120 US products, including steel pipes, dried fruit and wine worth $977m. China’s list also included close to 80 fruit and nut products. Then it would levy 25% on $1.99bn of pork and recycled aluminium.
The market in Tokyo is closed. It finished down 4.51%, or 974 points at 20,617.The market in Tokyo is closed. It finished down 4.51%, or 974 points at 20,617.
Masses of reaction from traders so let’s try to roundup some of their comments.Masses of reaction from traders so let’s try to roundup some of their comments.
Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo, sounded a slightly optimistic tone to Reuters by saying that US tariffs might not be quite as bad they appear. But then he essentially says it might get worse before it gets better:Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo, sounded a slightly optimistic tone to Reuters by saying that US tariffs might not be quite as bad they appear. But then he essentially says it might get worse before it gets better:
In the longer run, protectionist policies touted by the United States could be watered down, in turn limiting the negative effect on trade and the global economy. But until the United States makes such concessions, global stocks will be under pressure and the yen will appreciate, especially if China decides to confront the U.S. measures.In the longer run, protectionist policies touted by the United States could be watered down, in turn limiting the negative effect on trade and the global economy. But until the United States makes such concessions, global stocks will be under pressure and the yen will appreciate, especially if China decides to confront the U.S. measures.
Similarly, Vishnu Varathan of Mizuho Bank is quoted by Associated Press saying:Similarly, Vishnu Varathan of Mizuho Bank is quoted by Associated Press saying:
Beijing is extending an olive branch and urging the U.S. to resolve trade disputes through dialogue rather than tariffs. Nevertheless, the first volley of shots and retaliatory response has been set off.Beijing is extending an olive branch and urging the U.S. to resolve trade disputes through dialogue rather than tariffs. Nevertheless, the first volley of shots and retaliatory response has been set off.
Paul Eitelman, senior investment strategist at Russell Investments, tells Bloomberg:Paul Eitelman, senior investment strategist at Russell Investments, tells Bloomberg:
It’s a significant step in escalation in trade tensions between the US and China. The biggest watchpoint from here is how China responds to this and any potential escalation that creates going forward.It’s a significant step in escalation in trade tensions between the US and China. The biggest watchpoint from here is how China responds to this and any potential escalation that creates going forward.
The Australian benchmark index, the ASX200, has closed down almost 2%. The big miners, such as BHP and Rio Tinto, were among the biggest losers amid concern that demand for the country’s biggest export – iron ore – will be hurt by the tariffs.The Australian benchmark index, the ASX200, has closed down almost 2%. The big miners, such as BHP and Rio Tinto, were among the biggest losers amid concern that demand for the country’s biggest export – iron ore – will be hurt by the tariffs.
Australia's #ASX200 ends off session lows, but only just... down close to 2% on concerns about a global trade war #ausbiz #stocks #selloff #markets pic.twitter.com/BMVzAX0GbXAustralia's #ASX200 ends off session lows, but only just... down close to 2% on concerns about a global trade war #ausbiz #stocks #selloff #markets pic.twitter.com/BMVzAX0GbX
Elsewhere it’s an even grimmer picture. In Tokyo the Nikkei is off a whopping 4.58%. The yen has risen as invesors seek a safe haven, but that’s bad news for Japan’s exporters, hence the big drop in equities.Elsewhere it’s an even grimmer picture. In Tokyo the Nikkei is off a whopping 4.58%. The yen has risen as invesors seek a safe haven, but that’s bad news for Japan’s exporters, hence the big drop in equities.
BOOM! #Nikkei down 4.5% as trade tensions rise quickly. #China #Trump #Tariffs pic.twitter.com/O09r0z58psBOOM! #Nikkei down 4.5% as trade tensions rise quickly. #China #Trump #Tariffs pic.twitter.com/O09r0z58ps
Australia fears it could be hit by steel tariffs after it emerged that an exemption promised by Donald Trump would run on 1 May.Australia fears it could be hit by steel tariffs after it emerged that an exemption promised by Donald Trump would run on 1 May.
The White House said Friday that Australia, Europe, South Korea, Canada, Mexico, Argentina and Brazil would initially escape America’s 25% steel and 10% aluminium tariffs. But that would run out in a matter of weeks “pending discussions of satisfactory long-term alternative means to address the threatened impairment to US national security”.The White House said Friday that Australia, Europe, South Korea, Canada, Mexico, Argentina and Brazil would initially escape America’s 25% steel and 10% aluminium tariffs. But that would run out in a matter of weeks “pending discussions of satisfactory long-term alternative means to address the threatened impairment to US national security”.
The country’s trade minister, Steve Ciobo, said Australia could not have a fairer deal with the US but it may find itself in the same boat as China.The country’s trade minister, Steve Ciobo, said Australia could not have a fairer deal with the US but it may find itself in the same boat as China.
Here’s the full story:Here’s the full story:
And find out more about the EU’s reprieve – temporary or otherwise – with this story from our man in Brussels, Daniel Boffey:And find out more about the EU’s reprieve – temporary or otherwise – with this story from our man in Brussels, Daniel Boffey:
Good afternoon/good morning and welcome to our business live blog on a tumultuous day for the world economy.Good afternoon/good morning and welcome to our business live blog on a tumultuous day for the world economy.
China has wasted no time in signalling that it will retaliate against Donald Trump’s decision to impose tariffs on Chinese steel and aluminium imports. Beijing’s swift response was expected and, although Asian stock markets have been battered in the wake of Trump’s move, it left some room for negotiation with a plea for the US to “pull back from the brink”.China has wasted no time in signalling that it will retaliate against Donald Trump’s decision to impose tariffs on Chinese steel and aluminium imports. Beijing’s swift response was expected and, although Asian stock markets have been battered in the wake of Trump’s move, it left some room for negotiation with a plea for the US to “pull back from the brink”.
Here are the main developments so far:Here are the main developments so far:
China will impose duties on US pork, apples and steel pipe among other things unless a settlement could be reachedChina will impose duties on US pork, apples and steel pipe among other things unless a settlement could be reached
Beijing’s commerce ministry said it didn’t want a trade war but was “not afraid of having one” if the US didn’t back downBeijing’s commerce ministry said it didn’t want a trade war but was “not afraid of having one” if the US didn’t back down
Asian shares fell sharply along with key commodities such as iron oreAsian shares fell sharply along with key commodities such as iron ore
The Nikkei is down 4.4%; Hang Seng -2.8%; ASX200 in Sydney -2%; Kospi in Seoul 2.2%; CSI in Shanghai 3.2%.The Nikkei is down 4.4%; Hang Seng -2.8%; ASX200 in Sydney -2%; Kospi in Seoul 2.2%; CSI in Shanghai 3.2%.
The FTSE100 looks set to drop nearly 1% this morning, according to futures trade, while Germany’s Dax is set to drop 1.6%.The FTSE100 looks set to drop nearly 1% this morning, according to futures trade, while Germany’s Dax is set to drop 1.6%.
The Dalian iron ore price is down 5% on fears of a drop in demand for steelThe Dalian iron ore price is down 5% on fears of a drop in demand for steel
Copper fell to a three-month low of $6,628.00 per tonne, but oil rose 1% on the back of more Saudi production cutsCopper fell to a three-month low of $6,628.00 per tonne, but oil rose 1% on the back of more Saudi production cuts
The yen and bond prices rose as the US dollar fell backThe yen and bond prices rose as the US dollar fell back
The pound was up slightly at $1.416 and €1.444.The pound was up slightly at $1.416 and €1.444.