Finance

Dow tumbles more than 700 points amid mounting trade war fears

Dow tumbles more than 700 points amid mounting trade war fears

USA stocks traded lower on Thursday as news that President Donald Trump would propose trade duties on China imports stoked fresh fears about a potential trade war between two of the world's largest economies that could impede domestic economic expansion in roughly its ninth year. The FTSE 100 in Britain lost 0.2 percent.

Earlier this week, the Trump administration announced plans for tariffs on $50 billion worth of Chinese goods in retaliation for China's alleged theft of US intellectual property. Shares of Boeing, the single largest US exporter to China, tumbled 4.6 percent.

The return of market volatility, fears of a trade war and the recent underperformance of some of the major indices' largest components have been a drag on stocks overall.

Responding on Friday, China's Ministry of Commerce said it would immediately retaliate if the USA imposed the sanctions.

"The process itself seems to be quite chaotic", she said. "We're not quite sure what the long-term strategy is".

The Dow Jones Industrial Average fell 0.96 per cent to 24,271.17 and the Nasdaq Composite dropped 1.11 per cent to 6,998.10.

Friday's losses wiped out gains for the week, and the Dow sank back into correction territory - 10 percent below its all-time closing high in January.

A rough end to the week in the financial markets as the Dow Jones plunged 572 points amid escalating concerns over a trade war with China. The Russell 2000 index of smaller-company stocks dipped 29.63 points, or 1.9 percent, to 1,513.30.

Both China and the United States have threatened $50 billion worth of tariffs on each others exports.




TRADE TIFF: The administration spent the past few days reassuring investors that it's not rushing into a trade war, and China's government has done the same.

That came with the USA considering duties on an additional $100 billion in goods imported from China. China said it would "counterattack with great strength" if that happens.

The speed with which the trade spat between Washington and Beijing is ratcheting up - the Chinese government took less than 11 hours to respond with its own measures - led to a sharp sell-off in global stock markets and commodities.

"I'm not saying there won't be a little pain", Trump said.

Stocks dipped further after Trump criticized the World Trade Organization on Twitter Friday morning.

"We're going to need brand new, bad news on trade for the equity markets to push lower".

Benchmark U.S. crude dropped $1.48, or 2.3 per cent, to $62.06 a barrel in NY while Brent crude, used to price global oils, lost $1.22, or 1.8 per cent, to $67.11 per barrel in London.

Mnuchin said he was hopeful that negotiations with his Chinese counterparts could avert a damaging escalation of retaliatory, tit-for-tat tariffs but declined to elaborate on the status of talks and whether he thought an agreement could be reached.