On Wall Street, Fear of Trade Wars

On Wall Street, the S&P 500 index rose on Friday, while the Dow Jones slid for the fourth consecutive day in uncertain trading, marked by speculation on how the situation will develop after U.S. President Donald Trump announced tariffs on steel and aluminum imports.

The Dow Jones weakened by 70 points or 0.29 percent, to 24,538 points, while the S&P 500 strengthened by 0.51 percent, to 2,691 points, and the Nasdaq index by 1.08 percent, to 7,257 points.

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Trading on the world’s largest stock exchange was unstable again yesterday as fears of trade wars arose following Trump’s announcement on Thursday that starting next week, the U.S. would impose tariffs of 25 percent on steel and 10 percent on aluminum.

Numerous countries – from Germany and France to Canada and Russia – warned Trump that these measures could provoke countermeasures, but the U.S. president defiantly responded that trade wars are “good and easy to win.”

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As a result, speculation about the further development of the situation dominated global markets yesterday, with stock prices sharply falling on European and Asian exchanges, while the S&P 500 strengthened on Wall Street.

Despite the rise of the S&P, stock prices of companies that are major consumers of steel and aluminum, such as the automotive industry, remain under pressure.

The stock price of heavy machinery manufacturer Caterpillar sharply fell more than 2.5 percent for the second consecutive day as investors fear that raw material prices will rise and that the company will face trade barriers in foreign markets.

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In addition to fears of potential trade wars, uncertainty in the market also stems from the possible rise in inflation and interest rates in the U.S.

However, investors on Wall Street have somewhat calmed down as they hope that this is merely Trump’s threat due to the high U.S. trade deficit and that negotiations on how to resolve the situation will follow the announcement of tariffs.

And as the market was already under pressure before Trump’s announcement of tariffs due to investors’ fears of rising inflation and an accelerated pace of interest rate hikes by the U.S. central bank, the Dow Jones fell 3 percent over the past week, while the S&P 500 slid 2 percent and the Nasdaq index 1 percent.

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On European exchanges, stock prices sharply fell yesterday. The London FTSE index weakened by 1.47 percent, to 7,069 points, while the Frankfurt DAX plunged 2.27 percent, to 11,913 points, and the Paris CAC by 2.39 percent, to 5,136 points.