Markets suffer Trump slump on trade war fears
LONDON, March 2, 2018 (BSS/AFP) – Donald Trump’s controversial decision to slap tariffs on steel and aluminium imports sent world stock markets slumping on Friday as the move fuelled fresh fears of a global trade war, dealers said.
Traders, already on edge over worries about rising US interest rates, followed Wall Street sharply lower after the president imposed levies on the commodities in his “America First” policy.
The tariffs — 25 percent on steel and 10 percent on aluminium — cover two materials that are the lifeblood of the construction and manufacturing sectors.
“Donald Trump’s sudden lurch toward greater trade protectionism has spooked markets,” London Capital Group analyst Jasper Lawler told AFP.
“Any tit-for-tat response from other nations to the newly announced tariffs on steel and aluminium imports could spark a trade war.”
European equities nosedived, with Frankfurt tanking another two percent on worries about the eurozone’s powerhouse German economy, while Paris and London also slid.
– Germany hardest hit? –
“While Donald Trump considers himself pro-business, the imposition of tariffs across the aluminium and steel sector has led to fears over a collapse in global trade,” added IG analyst Joshua Mahony.
“The threat of a trade war was always likely to hit the export-driven German economy hardest.”
Aluminium and steel firms, as well as companies that use the products — such as electronics and auto makers — all took a major hit.
The world’s top steelmaker Arcelor Mittal slumped more than four percent in Paris, while German peer ThyssenKrupp shed almost three percent in Frankfurt.
German automaker Volkswagen and industrials giant Siemens each lost about three percent.
The London share price of Russian metals firm Evraz topped the FTSE 100 fallers to shed more than three percent, while there were heavy declines for miners Anglo American, Glencore and Rio Tinto.
– Kuroda weighs –
Asian equities also dived, with Tokyo tumbling 2.5 percent after Bank of Japan boss Haruhiko Kuroda indicated the central bank could start looking to wind in crisis-era stimulus as early as next year.
“I think the selloff was a number of things — not just trade — but including Kuroda’s comments on timelines for exit of stimulus,” said William Hamlyn, investment analyst at Manulife Asset Management.
“Markets are trying to decide whether this (Trump’s tariffs move) is just specific to steel or whether it’s the first step in a broader anti trade agenda,” he added.
The Trump news, which was even opposed by elements inside the White House, was met with anger from key allies including the EU and Canada. China has previously warned it would be forced to act should Trump push through such measures.
The tycoon had campaigned on a protectionist platform, saying the US was being taken advantage of by other countries, and promised to throw up barriers to protect jobs at home.
Markets have also been slammed this week after new Federal Reserve boss Jerome Powell fanned expectations of sharper-than-expected US interest rate increases, while investors remain anxious over Sunday’s looming election in Italy.
However, Powell struck a softer tone on Thursday, stressing that future rate hikes would be gradual and allow the world’s biggest economy to expand.
– Key figures around 1045 GMT –
London – FTSE 100: DOWN 0.9 percent at 7,113.17 points
Frankfurt – DAX 30: DOWN 2.1 percent at 11,935.10
Paris – CAC 40: DOWN 1.8 percent at 5,167.26
Milan – FTSE MIB: DOWN 2.2 percent at 21,961.20
EURO STOXX 50: DOWN 1.5 percent at 3,346.99
Tokyo – Nikkei 225: DOWN 2.5 percent at 21,181.64 (close)
Hong Kong – Hang Seng: DOWN 1.5 percent at 30,583.45 (close)
Shanghai – Composite: DOWN 0.6 percent at 3,254.53 (close)
New York – DOW: DOWN 1.7 percent at 24,608.98 (close)
Euro/dollar: UP at $1.2281 from $1.2267 at 2200 GMT
Pound/dollar: DOWN at $1.3770 from $1.3776
Dollar/yen: DOWN at 105.66 yen from 106.24 yen
Oil – Brent North Sea: DOWN 21 cents at $63.63 per barrel
Oil – West Texas Intermediate: DOWN 28 cents at $60.71