Shares take hit as US-China trade war deepens

Shares take hit as US-China trade war deepens

Stocks slumped, the dollar gained, and commodities slid as markets reeled from fresh salvos in the escalating trade war between the US and China.

The S&P 500 Index ended the longest rally in a month after the Trump administration said it will slap tariffs on an additional $200bn (€170.5bn) of Chinese products. China vowed to retaliate, helping to drive down shares across the world.

Metals bore the brunt of the reaction in commodities: Copper, nickel, and zinc all tumbled.

Trade-sensitive US shares led declines, with Caterpillar and Boeing slumping along with Freeport-McMoRan and Deere.

Emerging market equities fell almost 1% to halt a three-day climb. Brent crude oil fell $1.42 a barrel to $77.44.

“With tariff news moving once again to the front burner, market reaction abroad last night and early this morning underscores global market uncertainty as to the impacts of tariffs on economics and corporate profitability,” said Ernie Cecilia, chief investment officer at Bryn Mawr Trust.

“It also highlights clearly that short-term market movements, at the index level, are driven more so by headlines.”

By August 30, as the US nears mid-term elections vital for President Donald Trump’s legislative agenda, the White House will be ready to impose 10% tariffs on $200bn of Chinese-made products, ranging from clothing to television parts to refrigerators. The tariffs, together with some $50bn already in the works, stand to raise import prices on almost half of everything the US buys from China.

China has seven weeks to make a deal or dig in and try to outlast the US leader. The newest salvo in the trade war shattered the momentary calm in the markets that had sent the S&P 500 to the highest close since February. Investors in the US continue to be caught in a push and pull between corporate results, which begin to pile in this week, and the growing spectre of the trade war.

“It feels like we have been stuck in a ‘trade wars on, trade wars off’ for months now, and last night’s headlines about fresh US taxes on imports from China certainly fitted this game plan,” said Chris Beauchamp, chief market analyst at broker IG.

“The big question for investors is whether their fear of the damage done by tariffs outweighs their expectations of further global growth. While we have seen the S&P 500 knocked back once again from 2800, it remains within touching distance of this level.

“Perhaps trade wars are losing their ability to shock, or perhaps investors are more convinced after last week’s minutes that the Fed does have their back if things really do turn ugly.”

- Bloomberg, Irish Examiner

More on this topic

US-China trade deal ‘to do little for world economy’US-China trade deal ‘to do little for world economy’

Prices law takes the fizz out of champagnePrices law takes the fizz out of champagne

Hogan flexes commission muscle against Trump tariffsHogan flexes commission muscle against Trump tariffs

US tariffs will pose significant challengesUS tariffs will pose significant challenges

More in this Section

Dublin Airport celebrates 80 years with reflection and expansionDublin Airport celebrates 80 years with reflection and expansion

Netflix chief confirms interest in deal with Harry and MeghanNetflix chief confirms interest in deal with Harry and Meghan

Sajid Javid issues post-Brexit warning to business leadersSajid Javid issues post-Brexit warning to business leaders

Markets jump despite fresh US-China concernsMarkets jump despite fresh US-China concerns


Frank Keogh did not want to get a hearing aid. He was afraid that it would make him look old. But now, just several weeks after having one fitted, he says that he can’t do without it.Hearing tests: A word in your ear

I see that a website describes the call of Canarian cory’s shearwaters as ‘waca waca’. It’s a mad, hysterical call, uttered when the parent birds arrive to feed their nestlings.Cory’s shearwaters show long-distance qualities

Is it too much to hope that an important public health matter, such as Lyme disease, will be an issue in the general election? There’s been a worrying reluctance by the authorities to face up to the extent of the disease here.Facing up to Lyme disease

A paper published in Current Biology examines the extinction of a colourful little bird which, until recently, thrived in the eastern US. With the appalling environmental catastrophe enveloping Australia, home to 56 of the world’s 370 parrot species, this account of the Carolina parakeet’s demise is timely.Trying to save the parrot is not all talk

More From The Irish Examiner