Stocks volatile, oil plunges as trade war cranks higher ~ EconomyLens.com

London (AFP) – Wall Street rose but European and Asian stock markets tumbled along with oil on Wednesday as President Donald Trump’s trade war cranked up a notch. US President Donald Trump’s sweeping tariffs against trading partners kicked in, triggering strong retaliation from China, which slapped a higher 84-percent levy on US goods. The EU announced reprisals for steel and aluminum tariffs that entered force last month, targeting more than 20 billion euros ($22 billion) of US products including soybeans, motorcycles, and beauty products.

Growing fears of weakened demand sent oil prices to four-year lows, with international benchmark Brent North Sea crude dropping under $60. Frankfurt fell by three percent and Paris by 3.3 percent, as goods from the European Union now face a 20 percent tariff when entering the United States. London slumped 2.9 percent, with Britain having been hit with a 10 percent levy on Saturday. Most Asian equities markets fell back into the red, with Tokyo closing down 3.9 percent.

Wall Street’s main indices wobbled but were up in midday trading, with Trump urging calm after most indexes fell about 10 percent over the past week. “BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!” Trump posted on his Truth Social network. IG chief market analyst Chris Beauchamp said “volatility is a given from here,” with extended rallies possible even in a bear market. “Until we see some hard data on the impact of tariffs, it will be impossible to say that the low point has been reached,” he added.

Any hopes of a last-minute roll-back on tariffs were dashed as the United States earlier hit China — its major trading partner — with tariffs now reaching 104 percent. “The world’s largest and second largest economies are now locked in a trade war, and neither nation seems willing to back down,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. Speculation that Beijing will unveil stimulus measures helped Shanghai and Hong Kong stocks buck the downward trend in Asian equities.

Pharmaceutical firms took a heavy hit after Trump said he would be announcing a major levy on the sector. Europe’s most valuable company, weight-loss drug maker Novo Nordisk, and British pharmaceutical giant AstraZeneca both fell around seven percent.

Perhaps even more alarmingly, US Treasury markets are also experiencing an incredibly aggressive selloff, adding to the evidence that they’re losing their traditional haven status,” said Jim Reid, managing director at Deutsche Bank. The sharp rise in yields on US government bonds triggered similar increases in borrowing costs in the UK and Japan. “It feels like no asset class has been spared as investors continue to price in a growing probability of a US recession,” Reid added.

The rising yields may be an indication that investors need to sell bonds to cover losing positions in equity markets, which have fallen sharply in recent weeks. “When a few asset classes come under pressure, losses can pile up for investors and traders who are then forced to sell other investments including haven assets like government bonds,” said XTB research director Kathleen Brooks.

Foreign exchange markets were similarly rattled on Wednesday — Beijing has allowed the yuan to weaken to a record low against the dollar, while the South Korean won also hit its weakest since 2009 during the global financial crisis. The dollar took a knock against the euro and the yen.

**Key figures around 1530 GMT:**

– New York – Dow: UP 0.4 percent at 37,806.08 points

– New York – S&P 500: UP 0.6 percent at 5,010.71

– New York – Nasdaq Composite: UP 1.3 percent at 15,459.11

– London – FTSE 100: DOWN 2.9 percent at 7,679.48 (close)

– Paris – CAC 40: DOWN 3.3 percent at 6,863.02 (close)

– Frankfurt – DAX: DOWN 3.0 percent at 19,670.88 (close)

– Tokyo – Nikkei 225: DOWN 3.9 percent at 31,714.03 (close)

– Hong Kong – Hang Seng Index: UP 0.7 percent at 20,264.49 (close)

– Shanghai – Composite: UP 1.3 percent at 3,186.81 (close)

Euro/dollar: UP at $1.1062 from $1.0959

Pound/dollar: UP at $1.2785 from $1.2766