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| Wall Street stumbles as China-US tariffs fuel trade war fears - business live | Wall Street stumbles as China-US tariffs fuel trade war fears - business live |
| (35 minutes later) | |
| European stock markets have closed for the night, with trade jitters weighing on shares. | |
| The Stoxx 600 index, which tracks the biggest companies across Europe, has lost 0.5% today, with losses in Germany, France, Italy and Spain. | |
| Britain’s market did a little better, though, with the FTSE 100 finishing 3 points higher (up a meagre 0.05%). | |
| Here’s a transcript of Larry Kudlow, the US National Economic Council Director, telling Fox Business why a trade war won’t break out between the US and China. | |
| “Absolutely not. Absolutely not. And let me just say right at the top, number one, blame China, not President Trump. Because they’ve been going on for many years. | |
| Trump is really the first president to fight back and to put a shot across the bow, stealing intellectual property rights, technology transfers, high barriers, investment limitations, high tariffs – this stuff really is not just unfair, it’s unlawful. It’s outside the boundaries of the WTO. Every country in the world knows this. | |
| Every analyst knows this is the case. Somebody’s got to deal with it. President Trump is going to deal with it. There’s no trade war here. What you’ve got is the early stages of a process which will include tariffs, comments on the tariffs, then ultimate decisions and negotiations. There’s already backchannel talks going on. So look, I understand the stock market’s anxiety. I get that. But on the other hand, don’t over react. We’ll see how this works out. | |
| My view Stu, look, you know I’m a growth guy, I’m a Reagan supply side growth guy. I think that at the end of this whole process, that at the end of the rainbow, there’s a pot of gold. And if you open up that pot, you will see better economic growth, more trading going on, improved wages for both sides. | |
| Anytime you lower barriers, anytime you lower barriers, and that’s the key, the president will say this, lower barriers is the key, don’t raise the barriers. Anytime you do that, it’s good for growth. It’s good for American growth and American workers, it’s good for China’s growth, it’s good for the rest of the world’s growth.” | |
| It’s been a volatile morning on the New York stock exchange, as traders saw shares slide sharply at the open before recovering some ground... | |
| Jonathan Butcher, principal economist at consultancy firm Wood Mackenzie, reckons a full-blown trade clash between America and China would hurt global growth badly. | Jonathan Butcher, principal economist at consultancy firm Wood Mackenzie, reckons a full-blown trade clash between America and China would hurt global growth badly. |
| He says the mere risk of trade disputes will make people reluctant to spend, and discourage firms from investing in new equipment and factories. | He says the mere risk of trade disputes will make people reluctant to spend, and discourage firms from investing in new equipment and factories. |
| “The risk of a trade war developing is a threat to the global economy. We are currently enjoying a period of robust global growth, but sentiment plays a big part in maintaining economic momentum. The threat of a trade war could dampen sentiment, slowing consumer spending and business investment. Should a trade war escalate between the US and China, Wood Mackenzie estimates that global economic growth could slow from 2.9% to 2.2% over the next 4 years.” | “The risk of a trade war developing is a threat to the global economy. We are currently enjoying a period of robust global growth, but sentiment plays a big part in maintaining economic momentum. The threat of a trade war could dampen sentiment, slowing consumer spending and business investment. Should a trade war escalate between the US and China, Wood Mackenzie estimates that global economic growth could slow from 2.9% to 2.2% over the next 4 years.” |
| Wall Street is clawing its way back from its early slump. | Wall Street is clawing its way back from its early slump. |
| The Dow is still in the red, but only by 150 points (-0.6%) while the Nasdaq is only 0.5% lower lower. | The Dow is still in the red, but only by 150 points (-0.6%) while the Nasdaq is only 0.5% lower lower. |
| Traders may be heeding the soothing words of economics advisor Larry Kudlow, and reassessing the risks of a trade war. | Traders may be heeding the soothing words of economics advisor Larry Kudlow, and reassessing the risks of a trade war. |
| They’ve also received some decent economic news today. US companies created 241,000 private sector jobs last month, more than expected. That indicates the labor market is still strong, and could mean a strong Non-Farm Payroll jobs report on Friday. | They’ve also received some decent economic news today. US companies created 241,000 private sector jobs last month, more than expected. That indicates the labor market is still strong, and could mean a strong Non-Farm Payroll jobs report on Friday. |
| ADP Jobs Report comes in at 241,000 jobs added. Well above the 5 year average. Lower chart highlights this... $STUDY pic.twitter.com/i57VrKF3rr | ADP Jobs Report comes in at 241,000 jobs added. Well above the 5 year average. Lower chart highlights this... $STUDY pic.twitter.com/i57VrKF3rr |
| Commodity prices are still suffering, though; the soybean future contract is down almost 3%. | Commodity prices are still suffering, though; the soybean future contract is down almost 3%. |
| Larry Kudlow, the president’s new top economic advisor, has embarked on a mission to calm the markets. | Larry Kudlow, the president’s new top economic advisor, has embarked on a mission to calm the markets. |
| Speaking to reporters on the White House driveway, Kudlow insisted that America wasn’t about to lose a trade war with China. | Speaking to reporters on the White House driveway, Kudlow insisted that America wasn’t about to lose a trade war with China. |
| “No. I don’t see it that way. This is a negotiation, using all the tools” | “No. I don’t see it that way. This is a negotiation, using all the tools” |
| Kudlow, asked by reporters if US could lose a trade war, says, "No. I don't see it that way. This is a negotiation, using all the tools." (via @reuters) | Kudlow, asked by reporters if US could lose a trade war, says, "No. I don't see it that way. This is a negotiation, using all the tools." (via @reuters) |
| Kudlow has also popped up on Fox Business, to tell the markets not to panic. | Kudlow has also popped up on Fox Business, to tell the markets not to panic. |
| He claims that the Trump administration’s goal is to get rid of trade barriers, and create a genuine level-playing field of free and fair trade. | He claims that the Trump administration’s goal is to get rid of trade barriers, and create a genuine level-playing field of free and fair trade. |
| As Kudlow puts it: | As Kudlow puts it: |
| I think that at the end of this whole process, the end of the rainbow, there is a pot of gold. | I think that at the end of this whole process, the end of the rainbow, there is a pot of gold. |
| If you open up that pot, you will see better economic growth, more trading going on, improved wages for both sides. | If you open up that pot, you will see better economic growth, more trading going on, improved wages for both sides. |
| Any time you lower barriers....it’s good for growth. It’s good for American growth and American workers. It’s good for China’s growth. It’s good for the rest of the world’s growth. | Any time you lower barriers....it’s good for growth. It’s good for American growth and American workers. It’s good for China’s growth. It’s good for the rest of the world’s growth. |
| .@larry_kudlow on market reaction to China's tariff announcement: "Don't overreact, we'll see how this works out... At the end of this whole process, the end of the rainbow, there's a pot of gold." pic.twitter.com/ZPeYpYq2Kw | .@larry_kudlow on market reaction to China's tariff announcement: "Don't overreact, we'll see how this works out... At the end of this whole process, the end of the rainbow, there's a pot of gold." pic.twitter.com/ZPeYpYq2Kw |
| The US president has tweeted again: | The US president has tweeted again: |
| When you’re already $500 Billion DOWN, you can’t lose! | When you’re already $500 Billion DOWN, you can’t lose! |
| $500bn is a nice round number, but officially the US only ran a trade in goods deficit of $375.2bn with China last year. | $500bn is a nice round number, but officially the US only ran a trade in goods deficit of $375.2bn with China last year. |
| Any farmer planning to sell his soybean crop may not agree either...... | Any farmer planning to sell his soybean crop may not agree either...... |
| Today’s selloff means the Dow is now 11% off its record high, leaving it in correction territory. | Today’s selloff means the Dow is now 11% off its record high, leaving it in correction territory. |
| That record high, of 26,616 points, was set on Friday 26th January - the day Donald Trump addressed the World Economic Forum, and boasted that the US stock market was up 50% since he won the election. | That record high, of 26,616 points, was set on Friday 26th January - the day Donald Trump addressed the World Economic Forum, and boasted that the US stock market was up 50% since he won the election. |
| It’s never been higher since.... | It’s never been higher since.... |
| This is turning into a broad-based rout. | This is turning into a broad-based rout. |
| Each of the 30 blue-chip companies which makes up the Dow has fallen into the red. | Each of the 30 blue-chip companies which makes up the Dow has fallen into the red. |
| Chemicals maker DowDuPont has lost 2.8%, Intel has lost 2.5%, General Electric and Goldman Sachs is down 2%. | Chemicals maker DowDuPont has lost 2.8%, Intel has lost 2.5%, General Electric and Goldman Sachs is down 2%. |
| Every sector of the S&P 500 has also fallen. | Every sector of the S&P 500 has also fallen. |
| Boeing is also being hit hard. Its shares are down over 4% in early trading. | Boeing is also being hit hard. Its shares are down over 4% in early trading. |
| Bloomberg explains why China’s new 25% tariffs could be bad news for the airline maker: | Bloomberg explains why China’s new 25% tariffs could be bad news for the airline maker: |
| In a tit-for-tat response to tariffs from Trump, China announced the planned levy on aircraft weighing between 15,000 kilograms (33,000 pounds) and 45,000 kilograms, which would include some variants of Boeing’s 737 family of passenger jets. | In a tit-for-tat response to tariffs from Trump, China announced the planned levy on aircraft weighing between 15,000 kilograms (33,000 pounds) and 45,000 kilograms, which would include some variants of Boeing’s 737 family of passenger jets. |
| Single-aisle jets, dominated by the 737 and Airbus’s A320 family, both with sticker prices of about $100 million, are likely to account for three quarters of the global market over the next two decades, according to Boeing’s estimates. | Single-aisle jets, dominated by the 737 and Airbus’s A320 family, both with sticker prices of about $100 million, are likely to account for three quarters of the global market over the next two decades, according to Boeing’s estimates. |
| Boeing could suffer as China plans 25% tariff on U.S. aircraft https://t.co/a2Fq0Du3o0 via @technology | Boeing could suffer as China plans 25% tariff on U.S. aircraft https://t.co/a2Fq0Du3o0 via @technology |
| Shares in automobile manufacturers are falling in New York, following the news that China is proposing a 25% tariff on imports of some US cars. | Shares in automobile manufacturers are falling in New York, following the news that China is proposing a 25% tariff on imports of some US cars. |
| Fiat Chrysler is down 2.6%, electric carmaker Tesla has lost 3.7%, and Ford has dipped by 1.5%. | Fiat Chrysler is down 2.6%, electric carmaker Tesla has lost 3.7%, and Ford has dipped by 1.5%. |
| The opening bell of the New York stock market is ringing, and shares are taking a bath. | The opening bell of the New York stock market is ringing, and shares are taking a bath. |
| The Dow Jones industrial average has fallen by 480 points at the start of trading, as 2% was swiftly wiped off the benchmark index. | The Dow Jones industrial average has fallen by 480 points at the start of trading, as 2% was swiftly wiped off the benchmark index. |
| The S&P 500 index (which includes more companies than the Dow) and the tech-heavy Nasdaq index are also sliding, as investors express their anxiety over the tit-for-tat trade clashes between China and the US. | The S&P 500 index (which includes more companies than the Dow) and the tech-heavy Nasdaq index are also sliding, as investors express their anxiety over the tit-for-tat trade clashes between China and the US. |
| Details to follow.... | Details to follow.... |
| Just time for a quick peek at the European markets...and they’re all in the red, as trade war fears bite. | Just time for a quick peek at the European markets...and they’re all in the red, as trade war fears bite. |
| Connor Campbell of SpreadEx says investors have been “deeply disturbed by the speed and extent of China’s response” to America’s tariffs. | Connor Campbell of SpreadEx says investors have been “deeply disturbed by the speed and extent of China’s response” to America’s tariffs. |
| Tin hats on... | Tin hats on... |
| 10 minutes til the market open. Dow futures off 500 points. | 10 minutes til the market open. Dow futures off 500 points. |
| Traders in New York are getting ready for a rough open to the trading session, in just over 10 minutes. | Traders in New York are getting ready for a rough open to the trading session, in just over 10 minutes. |
| The Dow Jones is currently on track to fall by almost 550 points, according to the futures markets, as Wall Street gives its verdict on the latest US-China tariffs. | The Dow Jones is currently on track to fall by almost 550 points, according to the futures markets, as Wall Street gives its verdict on the latest US-China tariffs. |
| Dow futures indicate drop of more than 500 points with less than 30 minutes until the opening bell https://t.co/gpHP8xAh37 pic.twitter.com/Yj6wCXR3gu | Dow futures indicate drop of more than 500 points with less than 30 minutes until the opening bell https://t.co/gpHP8xAh37 pic.twitter.com/Yj6wCXR3gu |
| Fawad Razaqzada, market analyst at Forex.com, says trade war fears are gripping the financial markets today. | Fawad Razaqzada, market analyst at Forex.com, says trade war fears are gripping the financial markets today. |
| Investors are diving out of shares, and putting money into safe-haven assets like gold, he says: | Investors are diving out of shares, and putting money into safe-haven assets like gold, he says: |
| Dow futures have collapsed 500 points and other global indices were sharply lower at the time of writing after China retaliated overnight to a slate of trade measures launched by the US government hours earlier aimed at narrowing China’s vast trade surplus with America. | Dow futures have collapsed 500 points and other global indices were sharply lower at the time of writing after China retaliated overnight to a slate of trade measures launched by the US government hours earlier aimed at narrowing China’s vast trade surplus with America. |
| China said it will apply tariffs on 106 US-produced goods, ranging from aeroplanes to soya beans. | China said it will apply tariffs on 106 US-produced goods, ranging from aeroplanes to soya beans. |
| While the escalation of trade wars have weighed heavily on commodity prices such as corn, soya beans, crude oil and copper, gold on the other hand has been able to climb higher thanks to its safe haven status. | While the escalation of trade wars have weighed heavily on commodity prices such as corn, soya beans, crude oil and copper, gold on the other hand has been able to climb higher thanks to its safe haven status. |
| Gold is up 1% today, at $1,325 per ounce. | Gold is up 1% today, at $1,325 per ounce. |
| Jared Bernstein, former economic advisor to vice-president Joe Biden, argues that America and China might not actually impose these tariffs for months, or indeed ever: | Jared Bernstein, former economic advisor to vice-president Joe Biden, argues that America and China might not actually impose these tariffs for months, or indeed ever: |
| Re escalating trade conflict w/China: timing of when tariffs on either side go into effect is not nailed down. US could do so by June, but could also negotiate for 6 months after that. For now, these are tactical threats that may or may not come to fruition. | Re escalating trade conflict w/China: timing of when tariffs on either side go into effect is not nailed down. US could do so by June, but could also negotiate for 6 months after that. For now, these are tactical threats that may or may not come to fruition. |