Global shares wobbled Friday after the latest escalation in the China-U.S. trade war, with Japan and some European markets slipping while others stood firm.
The futures pointed toward slight gains before trading opened in North America — the S&P 500 advanced 0.7 per cent while futures for the Dow Jones Industrial Average were up 0.4 per cent.
The deepening worries over U.S. President Donald Trump’s trade war caused Tokyo’s benchmark to initially fall more than five per cent. It later regained some ground, closing three per cent lower at 33,585.58.
Then, China announced it was boosting its tariffs on U.S. exports to 125 per cent, to match the level of U.S. tariffs not including an earlier 20 per cent imposed weeks ago.
“The U.S. alternately raising abnormally high tariffs on China has become a numbers game, which has no practical economic significance, and will become a joke in the history of the world economy,” a Chinese Finance Ministry spokesperson said in a statement announcing the new tariffs. “However, if the U.S. insists on continuing to substantially infringe on China’s interests, China will resolutely counter and fight to the end.”
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Early Friday, the 10-year Treasury yield was at 4.40 per cent. The markets’ swings have hit the bond market and Treasury yields have jumped as bond prices fell on heavy selling. That worried experts early in the week because bonds are typically viewed as a safe haven for investors during times of instability, but instead they were ditching U.S. government bonds given the U.S. government’s tariff policy was the source of the instability.
In announcing a 90-day delay in implementing his higher tariffs against dozens of countries, Trump mentioned that the bond market was a bit “queasy.”
The 10-year Treasury yield shot up to nearly 4.50 per cent Wednesday morning from just 4.01 per cent at the end of last week. It calmed somewhat following Trump’s U-turn Wednesday on tariffs, dropping all the way back to 4.30 per cent shortly after the release of a better-than-expected report on inflation Thursday morning.
In early European trading, Germany’s DAX shed one per cent to 20,353.16, while the CAC 40 in Paris lost 0.4 per cent to 7,100.90. Britain’s FTSE 100 gained 0.5 per cent as the government reported the economy, the world’s sixth largest, enjoyed a growth spurt in February, the month before Trump started to roll out tariffs on imported goods. It expanded 0.5 per cent in February, ahead of market expectations for a more modest increase of 0.2 per cent.
South Korea’s Kospi fell 0.5 per cent to 2,432.72, while in Australia, the S&P/ASX 200 shed 0.8 per cent to 7,646.50.
Chinese markets rallied after President Xi Jinping met with Spanish Prime Minister Pedro Sanchez and Beijing announced plans for Xi to visit Vietnam, Malaysia and Cambodia.
China has been seeking to join forces with other countries in apparent hopes of forming a united front against Trump. The world’s second-largest economy is also ramping up its own countermeasures to Trump’s tariffs.
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Hong Kong’s Hang Seng picked up 1.1 per cent to 20,914.69 and the Shanghai Composite Index climbed 0.5 per cent to 3,238.23.
Taiwan’s Taiex gained 2.8 per cent as investors anticipated that orders for the island’s high-tech products will surge as trade between the U.S. and the Chinese mainland dwindles.
On Thursday, the S&P 500 tumbled 3.5 per cent, slicing into Wednesday’s surge of 9.5 per cent following Trump’s decision to pause many of his tariffs worldwide. The Dow Jones Industrial Average dropped 2.5 per cent and the Nasdaq composite tumbled 4.3 per cent.
Investors are viewing Trump’s decision to delay higher tariffs for most countries for 90 days as a ploy, not a pivot, Stephen Innes of SPI Asset Management said in a commentary.
“That’s the market hitting the brakes, hard. The sugar high from Trump’s tariff pause is fading fast,” he wrote.
Losses for U.S. stocks accelerated after the White House clarified that the United States will tax Chinese imports at 145 per cent, not the 125 per cent rate that Trump had written about in his posting on Truth Social Wednesday, once other previously announced tariffs were included. The drop for the S&P 500 exceeded six per cent at one point.
In other dealings early Friday, U.S. benchmark crude oil added 47 cents to $60.54 per barrel in electronic trading on the New York Stock Exchange.
Brent crude, the international standard, added 40 cents to $64.73 per barrel.
One dollar bought 142.58 Japanese yen, down from about 145 yen a day earlier. The Euro rose to $1.1380 from $1.1200.
