· Stocks fell sharply on Tuesday after a top U.S. trade official indicated that higher tariffs on Chinese goods are coming later this week, disappointing traders who hoped President Donald Trump’s weekend tweet threat was just a negotiation tactic.
The Dow Jones Industrial Average fell 473.39 points, or 1.79%, to 25,965.09 after plunging as much as 648.77 points at its low of the day, while the S&P 500 dropped 1.65% to 2,884.05. It was the Dow’s biggest drop since January 3. The Nasdaq Composite dropped 1.96% to 7,963.76. All 30 of Dow components fell and all 11 S&P sectors traded lower in the broad sell-off.
U.S. Trade Representative Robert Lighthizer told reporters that the U.S. will increase levies on Chinese imports on Friday.
· Lighthizer’s comments “further increased the likelihood of a tariff step up,” Keith Parker, a strategist at UBS, said in a note. A full-blown trade war would shave off 45 basis points from global economic growth, while China’s GDP would take a hit of between 1.2% and 1.5%.
“We still see a trade war as low probability given the next tranche of tariffs would hit US consumer goods, but nevertheless it would have a big negative impact,” he said.
· The Cboe Volatility Index, a measure of the 30-day implied volatility of the S&P 500 known as the “VIX” or the “fear gauge,” hit a fresh high of 21.09 on Tuesday, its highest level since January 22.
· European stocks closed sharply lower on Tuesday as investors monitored trade developments between the U.S and China.
The pan-European STOXX Europe 600 was 1.5% lower at the closing bell, with most sectors and major bourses seeing heavy losses.
· Asia stocks declined in Wednesday morning trade as investors digested U.S.-China trade developments that sent stateside shares tumbling overnight.
Japan’s Nikkei 225 dropped 1.51% in early trade, with shares of index heavyweights such as Fast Retailing, SoftBank Group and Fanuc all seeing declines. The Topix index also fell 1.43%.
In South Korea, the Kospi declined 0.86%, with Samsung Electronics and SK Hynix shares dropping by at least 1% each.
Australia’s ASX 200 also shed 0.84%, as most sectors declined.
Reference: CNBC
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