Published: Sat, March 24, 2018
Markets | By Terence Owen

Dow plunges 724 pts amid fears of US-China trade war

Dow plunges 724 pts amid fears of US-China trade war

Asian stock markets slumped Friday after Beijing responded to the Donald Trump administration's tariff hikes by saying it may slap higher import duties on a range of USA goods, ratcheting up fears of a trade war.

Stocks fell sharply Thursday following the Trump administration's move to place tariffs on some goods imported from China and restrict Chinese investment, with the Dow Jones Industrial Average falling about 740 points at its lowest, and losing almost 3 percent of its value.

The prospect of a full-blown trade war between the world's two biggest economies rattled investors Thursday, sending stocks to their biggest loss in six weeks.

Traders are anxious an escalating trade spat will hurt USA businesses, especially those that do a lot of sales overseas. The Nasdaq composite fell 174.01 points, or 2.4 per cent, to 6,992.67.

Stock indexes in Europe also fell sharply.

While the European Union will escape imminent trade tariffs on steel and aluminium imports because of continuing negotiations, China is expected to face their full force when the measures come into force on Friday. The S&P 500 has actually dropped 0.4% to 2632.15, while the Dow Jones Industrial Average has actually decreased 51.71 factors, or 0.2%, to 23,906.18.

Wall Street's three major indexes tumbled in late afternoon trading on Friday as investors shied away from risky bets going into the weekend while they braced for a potential USA trade war with China.

"This market is oversold,"said John Lynch, chief investment strategist at LPL Financial". Johnson & Johnson fell $2.09, or 1.6 percent, to $129.10 and Amgen declined $3.49, or 1.9 percent, to $178.10.

Sales outside the USA are especially important for technology companies.

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The drop on Thursday was the largest since a historic 1,032-point drop in February, as the tariff announcement caused concern with investors.

The social media giant came under heavy fire from lawmakers in the United States and Britain over the weekend after news reports raised questions about whether it allowed third-party developers to access the data of users without their permission - a potential violation of its privacy agreement with the USA government.

"We want reciprocal (trade)", Mr Trump said.

The sector .splrct is down 5.3 percent in the past four day, led by a drop in big tech names in the aftermath of Facebook's data privacy issues.

The S&P energy index was up 0.78 percent, with oil prices gaining and providing some relief to the market, as they have for most of this week. China's ambassador to the USA wouldn't rule out the possibility of the Asian nation scaling back purchases of Treasurys in response to the tariffs.

The Dow lost 5.7 percent this week, leaving it nearly 5 percent below the level where it was before Congress passed Trump's sweeping tax overhaul in late December. The Federal Reserve raised interest rates, as investors expected, and said it could raise rates at a quicker pace next year.

The Nasdaq composite sank 19.02 points, or 0.3 percent, to 7,345.29.

Benchmark U.S. crude oil shed 87 cents, or 1.3 percent, to $64.30 a barrel in NY. "The large bearish pattern remains in place with a downside target near 2,600", writes Intinet's Frank Cappelleri.

The dollar fell to 105.61 yen from 106.10 yen. Silver fell 3 cents to $16.39 an ounce. Gold prices rose $14.50, or 1%, to $1,341.80 an ounce.

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