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Trump takes steel rod to markets with trade war threat
NEW YORK, March 3, 2018 (BSS/AFP) – Donald Trump’s controversial decision
to slap tariffs on steel and aluminum imports, followed up with tweets
apparently welcoming a trade war, pummeled Asian and European stock markets
on Friday.
International equity markets, already on edge over worries about rising US
interest rates, tanked after the president vowed levies on the metals
products in his “America First” policy.
The tariffs — 25 percent on steel and 10 percent on aluminum — cover two
materials that are the lifeblood of the construction and manufacturing
sectors.
Trump followed up the tariff announcements with tweets on Friday that
boasted “trade wars are good, and easy to win” and said he planned to impose
“reciprocal taxes” on trading partners.
Oxford Economics warned of “tit-for-tat” retaliation from other countries.
“While we are still far from a full-blown trade war that could threaten
the global recovery, Trump’s actions have increased the risks of such a
downside event,” Oxford Economics said in a research note.
But Oxford’s Gregory Daco told AFP the hit to US GDP could show up very
soon in second quarter numbers, if the tariffs are imposed and trading
partners begin to fight back.
European equities fell sharply, with Frankfurt tumbling 2.3 percent on
worries about the eurozone’s powerhouse German economy, and Paris falling 2.4
percent.
Slumping shares in mining companies penalized London’s FTSE 100, which
ended the day down 1.5 percent.
Asian equities also dived, with Tokyo tumbling 2.5 percent after Bank of
Japan chief Haruhiko Kuroda indicated the central bank could start looking to
wind down crisis-era stimulus as early as next year.
US stocks opened sharply lower before reversing course, with the Nasdaq
ultimately winning 1.1 percent after investors stepped in to buy shares of
technology equities at depressed levels.
Analysts noted that US stocks already had fallen sharply on Thursday on
Trump’s comments.
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The tycoon 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. But many on Wall Street had hoped the harsh rhetoric
would not be followed with tangible action.
Some said a trade war was not a foregone conclusion.
JJ Kinahan, chief market strategist at TD Ameritrade, said “a trade war
benefits no one,” and he was hopeful threats of retaliation by US trading
partners may not become a reality.
“Everyone realizes a trade war doesn’t do anyone any good, so if it’s
scaled down considerably, maybe the other countries condemn it but don’t
necessarily do anything about it,” Kinahan said.
– Germany hardest hit? –
But anxiety was elevated across trading floors.
“While Donald Trump considers himself pro-business, the imposition of
tariffs across the aluminum 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.”
Aluminum and steel firms, as well as companies that use the products —
such as electronics and auto makers — all took a major hit.
Shares in the world’s top steelmaker ArcelorMittal slumped nearly four
percent in Amsterdam. Shares in its German peer ThyssenKrupp fell by more
than four percent in Frankfurt, where it topped the losers board.
Shares in German automakers Volkswagen and Daimler shed more than two
percent and industrials giant Siemens lost more than three percent.
– Key figures around 2200 GMT –
New York – DOW: DOWN 0.3 percent at 24,538.06 (close)
New York – S&P 500: UP 0.5 percent at 2,691.25 (close)
New York – Nasdaq: UP 1.1 percent at 7,257.87 (close)
London – FTSE 100: DOWN 1.5 percent at 7,069.90 points (close)
Frankfurt – DAX 30: DOWN 2.3 percent at 11,913.71 (close)
Paris – CAC 40: DOWN 2.4 percent at 5,136.58 (close)
Milan – FTSE MIB: DOWN 2.4 percent at 21,912 (close)
EURO STOXX 50: DOWN 2.1 percent at 3,327.20
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)
Euro/dollar: UP at $1.2300 from $1.2267 at 2200 GMT
Pound/dollar: UP at $1.3792 from $1.3776
Dollar/yen: DOWN at 105.73 yen from 106.24 yen
Oil – Brent North Sea: UP 54 cents at $64.37 per barrel
Oil – West Texas Intermediate: UP 25 cents at $61.25 per barrel
BSS/AFP/HR/0945