Global markets rocked by escalating trade fights

The Nasdaq Composite fared the worst among major US stock benchmarks today.

Even as the Dow and the S&P 500 bounced back from their worst levels of the day, the tech-heavy Nasdaq remained sharply lower, closing down 1.3% for the day and 3.9% lower for the week. It was its worst weekly performance since December.

The next round of US tariffs on Chinese imports will hit consumer products like computers and iPhones. Those items could get more expensive, depending on whether the producers decide to pass down the additional costs to the consumer.

The tariffs could deal a blow to Apple’s (AAPL) iPhone sales, shaving off between 6 million and 8 million in the United States, according to Wedbush Securities technology analyst Dan Ives.

Chipmakers are also getting hit. Intel (INTC), Qualcomm (QCOM) and Advanced Micro Devices (AMD) have all said that the trade spat between Washington and Beijing, as well as restrictions on doing business with Chinese tech-giant Huawei, is weighing on their bottom lines and forecasts.

US stocks closed in the red on Friday after escalation in the trade war with China, making it the worst week of the year for the S&P 500 and the Nasdaq Composite. For the Dow, it was the worst week since May.

Companies reliant on global trade were hit particularly hard on Friday.

Cisco Systems (CSCO) was the weakest Dow stock, closing down 3.9%. Nike (NKE), Apple (AAPL) and IBM (IBM) also ended in the red.

Markets are in disarray since yesterday’s announcement of new tariffs on Chinese imports.

Yields on US Treasuries are slipping in response to the renewed uncertainty about trade. There are a few reasons for that.

First, bond yields track future interest rate expectations.

A continued trade conflict with China will keep business investment suppressed in the United States, which could weigh on economic growth. The new tariffs are also targeting consumer goods like toys and apparel at a time when the American consumer has been a strong driver of GDP growth. This could mean that the Federal Reserve will be more inclined to cut interest rates again in September to boost the economy.

Second, US Treasuries are a safe haven investment.

In times of market turmoil, investors turn to America’s government bonds. With more demand, prices rise and yields fall.

Today the yield on 10-year Treasuries hit a level not seen since November 2016. It last stood at 1.8640%.

With apologies to the late Mister Rogers – it’s not another beautiful day in Wall Street’s neighborhood. But investors are finding some happy places to hide out as the broader market tumbles again. There’s a flight to safety going on, and big dividend payers are benefiting.

As of midday, just six of the Dow’s 30 stocks were trading higher: Merck (MRK), Verizon (VZ), Coca-Cola (KO), McDonald’s (MCD), Travelers (TRV) and Boeing (BA).

What do they all have in common? Their yields are higher than the puny 1.87% that investors are currently getting from the 10-Year US Treasury.

The trade war is likely to hurt corporate profits, but investors can still seek solace in companies that will pay them a steady dividend, even if the economy slows.

Trade war fears are back, and they’re back with a vengeance.

Stocks are bracing for a dramatic finish this week, after President Donald Trump announced new tariffs on Chinese imports yesterday.

The Dow (INDU) shed 300 points on Friday. The S&P 500 (SPX) and the Nasdaq Composite (COMP) slid 1.2% and 1.9% respectively. The S&P and Nasdaq are on track for its worst week since December. For the Dow, it is shaping up to be the worst week since late May, according to Refinitiv.

US stocks opened in the red on Friday, adding on to the losses incurred after President Donald Trump announced new tariffs on Chinese imports.

Worries about trade and global economic growth are back with a vengeance and overshadowed a healthy July jobs report that was in line with expectations.

Chevron (CVX) and Exxon Mobil (XOM) reported second-quarter results before the bell, both beating earnings expectations. Exxon shares climbed 0.5%, while Chevron stock rose 0.8% at the open.

On Thursday, energy stocks got slammed after US oil prices settled down 8%, the steepest drop since 2015.

President Donald Trump has stepped up his trade war with China, a move that some economists and market strategists fear could hurt jobs, raise prices and drag down stocks.

Despite that, strategists at UBS noted that none of the major Democratic candidates for president have expressed any significant reservations about Trump’s trade policy. The topic was not a focus of either of the two debates that aired on CNN earlier this week.

The UBS analysts argue that “the Democratic candidates are keenly aware of the mixed feelings that global trade generates in the American heartland and in particular among voters in pivotal Midwestern states.”

In other words, UBS expects the field of Democratic contenders to criticize Trump’s bombastic tweets and the way he communicates in general – but not the tariffs per se.

China has vowed “necessary countermeasures” against the new US tariffs. Here’s a look at its main options — and why none of them are easy.

Read more about China’s possible retaliation here. 

Stock futures remained in the red after the July jobs report met expectations. The trade news seem to have outweighed the domestic developments for now.

The US economy added 164,000 jobs last month, in line with the Refinitiv consensus forecast. The unemployment rate was steady at 3.7%. Average hourly earnings rose 3.2% year-over-year, slightly more than expected.

But despite the healthy report, “an eventual slowdown in jobs growth could be inevitable as business investment has cooled off across the board mainly due to tariffs, and continued uncertainty around a trade deal,” said Massud Ghaussy, Nasdaq IR Intelligence Senior Analyst, in emailed comments.

Trade war fears are back, and they’re back with a vengeance.

Stocks are bracing for a dramatic finish this week, after President Donald Trump announced new tariffs on Chinese imports yesterday.

Starting September 1, $300 billion worth of goods from China, including toys and iPhones, will be hit with a 10% tariff. That’s on top of the existing 25% tariff on $250 billion worth of imports.

US stock futures and global markets are flashing red in response. Futures of the Dow (INDU) are down 0.3%, while those for the S&P 500 (SPX) and the Nasdaq Composite (COMP) are down 0.4% and 0.8%, respectively.

Read the full story here.

US President Donald Trump’s plan to slap new tariffs on Chinese goods could threaten a promised reprieve for Huawei, which has become a flashpoint in the escalating trade war.

Before Trump fired his latest salvo, there had been some expectation that he could ease restrictions on the Chinese tech company. Huawei, which is the world’s largest telecommunications equipment maker and a leading smartphone brand, has been on a US trade blacklist since May.

But the decision to reignite the trade war with a 10% tariff on $300 billion worth of Chinese goods from September 1 — effectively a tax on all goods from China that come into the United States — throws any respite into question.

Read more here.

President Donald Trump’s latest tariff proposal “seriously violates the consensus” reached with Chinese President Xi Jinping at the G20 in Osaka and “is not conducive to solving the problem,” China’s Ministry of Commerce spokesperson said in a written statement. 

“If the US implements the tariff, China will have to take necessary countermeasures to resolutely defend the core interests of the country and the fundamental interests of the people. All the consequences will be borne by the US,” the spokesperson added.

The Ministry of Commerce said the move would have “a chilling effect” on the world economy.

“The Chinese side always believes that there is no winner in the trade war. It does not want to fight but is not afraid of a fight.”

South Korea says it will respond in kind after Japan removed it from a list of countries that receive preferential treatment on trade. It’s the latest move in a dispute that threatens to reduce cooperation between two of the largest economies in Asia.

South Korea’s finance minister, Hong Nam-ki, said Friday that his government would take steps next week to exclude Japan from its own list of preferred trade partners.

Japan said earlier on Friday that it would remove South Korea from a so-called white list. Japanese exports to South Korea will now require additional screening to make sure they are not used for weapons and military applications.

The spat between the two countries started last month when Tokyo placed controls on exports of three chemical materials to South Korea. The materials are used to make computer chips, among other things.

Tension between the two countries has been rising for months, stemming in part from Japan’s colonial rule over the Korean peninsula. South Korea’s top court recently ruled that its citizens can sue Japanese companies for using forced Korean labor during World War II. Japan has denied that the two issues are linked.

The Chinese government will have to be very careful in its approach to future trade talks with the Trump administration, analysts say.

“With the direct hit to China’s economy still manageable, President Xi has more to lose – not least in appearing personally to be caving in – than he would gain from making changes to industrial policies that both he and the White House hawks believe have served China well,” Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note Friday.

“As such we expect the tariffs to go ahead and furthermore that they will be raised, to 25% on all Chinese goods imports to the US, before long.”

Analysts at Citi Research said in a report Friday that they believe “China will become more cautious in dealing with Trump on trade.”

“Rather than giving in to the US demand, we expect China will firm up its bottom lines and formally use the strategy of waiting it out,” wrote analysts Li-Gang Liu, Xiaowen Jin and Xiangrong Yu. 

Japan dropped South Korea as a preferred trading partner on Friday, escalating a dispute that threatens the global supply chain for smartphones and electronic devices.

The decision to remove South Korea from a so-called white list means that Japanese exports to South Korea now require additional screening to make sure they are not used for weapons and military applications.

South Korea was the only Asian country on the white list. Revoking its preferred status means the country will receive the same treatment as other Asian countries and territories, including Taiwan, Japan’s Chief Cabinet Secretary Yoshihide Suga said Friday.

“This is not a trade ban,” he added.

That’s not how Seoul sees it. South Korean President Moon Jae-in said the move was “reckless” and he threatened retaliation. His party accused Japan of waging “economic war.”

The new restrictions go into effect August 28.

European stocks have joined the global sell-off sparked by President Donald Trump’s threat to impose new tariffs on China.

Here’s a summary of the early action:

Global investors are running scared. “There hasn’t been much data to distract from trade war overnight,” Societe Generale strategist Kit Juckes wrote in a research note.

The next big event on the global markets agenda is the US jobs report for July, which will be published at 8:30 a.m. ET.

President Donald Trump said Thursday that he would add new tariffs on $300 billion of Chinese-made products from September 1, which would essentially mean all Chinese goods coming into the United States are taxed.

Later in the day, Trump said in remarks to reporters at the White House that he might still ratchet tariffs up to 25%, as he’s previously threatened — or even higher.

“It can be lifted in stages so we’re starting at 10% and it can be lifted up to well beyond 25%,” the president said. “But we’re not looking to do that, necessarily.”

President Trump issued his new threat of tariffs on China following a mid-morning meeting in the Oval Office with his trade team to update him on talks that wrapped this week in Shanghai, according to an administration official familiar with the matter.

The team included Treasury Secretary Steven Mnuchin and US Trade Rep. Robert Lighthizer.

Trump wasn’t pleased that China didn’t offer concrete promises to purchase American agricultural products during the talks, something he believed was agreed to when he met with Chinese President Xi Jinping in June, according to the official.

While the trade officials told Trump they believed there is still potential for a deal to be struck with China, they said they were still far off any kind of agreement.

Trump issued the four-tweet message announcing new tariffs starting in September with input from Mnuchin and Lighthizer, according to the official.

Markets around the world were jolted by news of the tariffs Thursday.

Context: “Stocks were just recovering from the lack of easing commitment by the Fed on Wednesday when Trump sent the market in a tailspin,” Alfonso Esparza, a senior market analyst at forex broker OANDA, wrote in a note.

China’s Foreign Minister Wang Yi said that US tariffs were not the correct way to solve the trade dispute, speaking to reporters on the sidelines of the ASEAN summit in Bangkok.

“I just saw the news. Adding tariffs is not a constructive way to resolve the trade dispute, it’s not the correct way,” Wang Yi said in response to a question shouted by local government-run station Shenzhen TV.