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Stock markets subdued as China-US tariffs take effect
LONDON, Aug 24, 2018 (BSS/AFP) – Global stock markets steadied on Thursday
as China and the US exchanged fresh tit-for-tat tariffs on billions of
dollars of goods.
Washington has imposed levies on $16 billion in Chinese imports, sparking
an immediate retaliation in kind from Beijing, which said it “firmly opposes
the tariffs and has no choice but to continue to make the necessary counter-
attacks”.
China also said it “clearly suspected” the United States of violating World
Trade Organization rules and that it would file a complaint with the group.
The fresh tariffs come as US and Chinese officials hold their first talks
since June aimed at easing a row that has dragged on equities for months.
However, observers are cautious about what progress they will make initially.
“Today sees the US-China trade talks come to a head, with low market
expectations likely to drive the response to any final announcement,” said
Joshua Mahony, market analyst at IG trading group.
Thursday’s levies are the second round of such measures after the world’s
top two economies swapped tariffs on $34 billion of goods in July.
Investors were also keeping tabs on developments in Washington after US
President Donald Trump’s former personal adviser admitted a series of charges
including illegal use of election funds.
Trump’s ex-campaign manager was also convicted on several counts including
bank and tax fraud.
Trump warned Thursday the US economy would collapse if he were impeached,
as legal chaos roiling the White House has experts saying his presidency is
under threat.
“I will tell you what, if I ever got impeached, I think the market would
crash. I think everybody would be very poor,” Trump said on “Fox and
Friends”.
Wall Street’s main indices nudged lower at the opening bell, with Dow
slipping 0.09 percent.
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In Europe, London was essentially flat, with Paris off 0.06 percent and
Frankfurt down 0.1 percent.
On currency markets Thursday, the dollar sprang back to life after this
week’s travails, with Federal Reserve minutes signalling it is ready to lift
rates again as the economy continues to improve.
“Many participants suggested that if incoming data continued to support
their current economic outlook, it would likely soon be appropriate to take
another step,” the minutes said.
The greenback had taken a hit this week from Trump’s comments criticising
the central bank’s rate increases and accusing it of not backing his economic
plan.
However, the Fed’s policy committee on Wednesday pointed to “ongoing trade
disagreements and proposed trade measures as an important source of
uncertainty and risks”.
In addition, most members said “an escalation in international trade
disputes was a potentially consequential downside risk for real activity”.
Attention was meanwhile also on this week’s upcoming annual central
bankers’ symposium at Jackson Hole in Wyoming, with investors hoping for some
idea about governors’ plans in light of the China-US trade row.
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