Global Markets: Wall Street Plummets Amid Trade War Focus

On Wall Street, the S&P 500 index sharply fell on Thursday, diving into correction territory, as investors fear that the trade war being waged by Washington on multiple fronts will spur inflation and lead to a recession.

The Dow Jones index weakened by 1.30 percent, to 40,813 points, while the S&P 500 fell by 1.39 percent, to 5,521 points, and the Nasdaq index by 1.96 percent, to 17,303 points. The day before, the indices had slightly risen as investors were encouraged by a slight easing of inflation in the U.S.

However, inflation could rise in the coming months, given that U.S. President Donald Trump is conducting a trade war on multiple fronts – with Canada, Mexico, China, the European Union… Yesterday, tensions flared again between Washington and Brussels.

As tariffs of 25 percent on steel and aluminum imports to the U.S. came into effect at the beginning of the week, the European Commission announced countermeasures. Among other things, tariffs of 50 percent on imports of American whiskey. In response, Trump threatened yesterday with tariffs of 200 percent on imports of European wines and alcoholic beverages.

In addition to the fact that the escalation of the trade war could raise inflation, investors fear it will negatively impact international trade and economic growth.

– Sentiment is poor. Every day, new news about tariffs comes in, and that weighs on the market. The situation is not good at all – says Mike Dickson, director at Horizon Investments.

After yesterday’s decline, the S&P 500 joined the Nasdaq index in correction territory, meaning it has fallen more than 10 percent below its record level reached in February.

European Markets on Track for Weekly Losses

European markets are trading cautiously on Friday morning, as in previous days, as investors are concerned about the trade war between the U.S. and the European Union, while indices are on track for weekly losses.

The STOXX 600 index of leading European stocks was almost unchanged at 9:30 AM compared to yesterday, while on a weekly basis it is down about 2 percent. Meanwhile, the London FTSE index strengthened by 0.16 percent, to 8,555 points, while the Frankfurt DAX weakened by 0.06 percent, to 22,555 points, and the Paris CAC by 0.02 percent, to 7,940 points.

Investors are cautious as they fear the escalation of the trade war between the U.S. and the European Union. As tariffs of 25 percent on steel and aluminum imports to the U.S. came into effect at the beginning of the week, the European Commission announced countermeasures.

Among other things, tariffs of 50 percent on imports of American whiskey. In response, U.S. President Donald Trump threatened yesterday with tariffs of 200 percent on imports of European wines and alcoholic beverages. In addition to the fact that the escalation of the trade war could raise inflation, investors fear it will negatively impact international trade and economic growth.

Meanwhile, Asian stock prices have risen. The MSCI index of Asian stocks was up 0.4 percent at 9:30 AM.

The Japanese Nikkei index strengthened by 0.7 percent, while stock prices in Australia, Shanghai, and Hong Kong rose between 0.5 and 2.4 percent. In South Korea, however, they slightly fell. The rise of most indices is mainly attributed to the correction of stock prices after a sharp decline this week, as there are no significant news from the region to support the markets.

At the same time, Chinese markets are rising thanks to a recent promise from authorities that new measures to stimulate economic growth will be introduced soon.