Global markets are reeling from US President Donald Trump’s escalating trade war with China, as the threat of additional tariffs sends shockwaves through global markets.
The threat of additional trade tariffs by US President Donald Trump against China, on top of the 10% hike imposed earlier this month, has sent shockwaves through global markets. The move has contributed to a widespread stock market sell-off, with investors fearing the escalation of a deepening global trade war.
“The only certainty in this saga is uncertainty, so keep a close eye on developments between now and 4 March.” said Derren Nathan, head of equity research at Hargreaves Lansdown.
Market Sentiment at an All-Time Low
The sentiment was already sour on the tariff front, given the specter of 25% import duties being slapped on the “EU”. However, Trump‘s confirmation that his proposed 25% tariffs on Mexican and Canadian goods would take effect on March 4, alongside an extra 10% duty on Chinese imports, has further fueled market fears.
The European Union (EU) is a political and economic union of 27 member states that are located primarily in Europe.
The EU was established by the Maastricht Treaty in 1993 and has its headquarters in Brussels, Belgium.
The EU aims to promote peace, stability, and economic growth among its member states through policies such as free movement of people, goods, and services.
The EU is also a major player in global affairs, with a single market that accounts for over 20% of global GDP.
Global Markets in Free Fall
The Hang Seng in Hong Kong fell more than 3%, while Japan’s Nikkei slumped to a five-month low as demand soared for the safe-haven yen. In Europe, the DAX in Germany and French CAC were on course to build on declines seen on Thursday, with the manufacturing-heavy DAX losing just shy of 1% at the open.
The global market refers to the aggregate of all domestic markets of individual economies.
It is a complex system that facilitates the exchange of goods, services, and capital between countries.
According to the World Bank, international trade accounted for over 28% of global GDP in 2020.
The global market is driven by factors such as technological advancements, globalization, and changing consumer preferences.
Key players in the global market include multinational corporations, governments, and financial institutions.
UK Market Performance
Although the UK may have been spared Trump tariff threats, the FTSE 100 still felt some pain, registering a decline of 0.4% in early trading before entering positive territory later in the day. Strong corporate earnings from British Airways parent firm IAG helped to boost the market.
Economic Fears and Inflation Risks
The main fear among investors is damage to the global economy from a widening and protracted trade fight as Trump battles to secure American jobs through the imposition of tariffs. However, one consequence of higher import costs due to duties is the risk of stoking US inflation, as costs are passed on.
Cryptocurrency Hammered
Brent crude oil was down by almost 1% to trade at $73 a barrel, while cryptocurrencies took the largest hammering. Bitcoin was 27% below its record high set in January and down by 6% on the day.
White House Justification
Trump told reporters that he decided to add extra tariffs on China and stick to the deadline for Canada and Mexico because of what his administration sees as insufficient progress on curbing fentanyl flows into the country. However, China‘s foreign ministry firmly rejected this narrative, stating that they would take all necessary measures to safeguard their legitimate interests.
Uncertainty Reigns
The threat of additional trade tariffs by US President Donald Trump against China, on top of the 10% hike imposed earlier this month, has sent shockwaves through global markets. The move has contributed to a widespread stock market sell-off, with investors fearing the escalation of a deepening global trade war.
“The only certainty in this saga is uncertainty, so keep a close eye on developments between now and 4 March.” said Derren Nathan, head of equity research at Hargreaves Lansdown.
- sky.com | Trumps China tariff escalation spooks global markets
- uk.news.yahoo.com | Trumps China tariff escalation spooks global markets
