NEW YORK, May 14 — China’s move to retaliate against the latest US tariffs pummelled global stocks yesterday, with Wall Street suffering an especially bruising blow amid fears the year-long conflict could deteriorate further.
The Nasdaq experienced its worst day of 2019 after Beijing announced it would increase tariffs on US$60 billion (RM249.8 billion) worth of US goods from June 1, striking back after US-China trade talks ended last week with no agreement and after Washington raised tariffs and signalled it could impose additional levies on Chinese goods soon.
The editor of the party-owned Chinese newspaper Global Times said on Twitter Beijing could take additional actions, including dumping US Treasuries, ending US agricultural purchases and reducing orders for Boeing airplanes.
“A US-China trade deal was pretty much priced into the market,” said Sam Stovall, chief investment strategist at CFRA Research. “Now who knows what has to be accomplished before a deal can be reached?
“That is causing investors to bail out and say ‘I don’t know what is going to happen.’”
US stocks opened sharply lower and fell further later in the session. The Dow lost more than 615 points, or 2.4 per cent, to finish at 25,324.99, its lowest close in more than three months.
Paris and Frankfurt both lost more than one per cent, while London suffered more modest declines.
Earlier, Asian markets had begun the day in underwhelming fashion in Asia, as the lack of a US-China trade deal after last week’s talks in Washington jarred markets.
Both sides have indicated that discussions will continue, although no date has been set for the next round of talks, which will be held in Beijing.
Despite yesterday's drop, markets still believe a deal is likely, said Pantheon Macroeconomics’ Ian Shepherdson.
“If markets were to believe wholeheartedly that the trade talks with China will break down and that the US will impose tariffs on all Chinese imports, as the president has repeatedly threatened, the index would be much lower,” he wrote in a note.
The flare-up in trade conflict also weighed on the oil market, which had initially been propelled yesterday by mounting tensions in the oil-rich Middle East.
Saudi Arabia said that two of its oil tankers were damaged in mysterious “sabotage attacks.”
Riyadh, Tehran’s regional arch-rival, condemned “the acts of sabotage which targeted commercial and civilian vessels near the territorial waters of the United Arab Emirates,” a foreign ministry source said.
Tehran called for an investigation into Sunday’s “alarming” attacks off the Emirati coast and warned of “adventurism” by foreign players to disrupt maritime security.
But crude finished yesterday's session lower on worries that the trade war could slow global growth, denting oil demand.
Key figures around 2050 GMT
New York — Dow: DOWN 2.4 per cent at 25,324.99 (close)
New York — S&P 500: DOWN 2.4 per cent at 2,811.87 (close)
New York — Nasdaq: DOWN 3.4 per cent at 7,647.02 (close)
London — FTSE 100: DOWN 0.6 per cent at 7,163.68 (close)
Frankfurt — DAX 30: DOWN 1.5 per cent at 11,876.65 (close)
Paris — CAC 40: DOWN 1.2 per cent at 5,262.57 (close)
EURO STOXX 50: DOWN 1.2 per cent at 3,320.78 (close)
Tokyo — Nikkei 225: DOWN 0.7 per cent at 21,191.28 (close)
Shanghai — Composite: DOWN 1.2 per cent at 2,903.71 (close)
Hong Kong — Hang Seng: closed for a public holiday
Oil — Brent Crude: DOWN 39 cents at US$70.23 per barrel
Oil — West Texas Intermediate: DOWN 62 cents at US$61.04 per barrel
Euro/dollar: DOWN at US$1.1227 at US$1.1233 at 2100 GMT
Pound/dollar: DOWN at US$1.2959 from US$1.2998
Dollar/yen: DOWN at ¥109.30 from ¥109.95 — AFP