LONDON – World stock markets plunged Monday and the Chinese yuan fell sharply in reaction to US President Donald Trump vowing to impose fresh tariffs on Chinese goods in the latest trade war flare-up.
Europe’s stocks dived about two percent, mirroring heavy falls in Asia – where Hong Kong tumbled nearly three percent as it was hurt also by ongoing pro-democracy protests.
“European equity markets have been rocked by the rising trade tensions between the US and China,” said IG analyst David Madden.
“There is a feeling that China could inflict a lot more pain on the US in terms of the trade spat, and many traders are worried the economic conflict will rumble on for some time.”
Trump’s announcement late last week means virtually all of the 660 billion dollars in annual merchandise trade between the world’s two biggest economies will be subject to punitive tariffs, with the latest duties to take effect September 1.
The news saw all three major Wall Street indices slump to their lowest levels since June, with the S&P 500 and Nasdaq recording their worst weekly losses of 2019 on Friday.
On Monday, the DJIA again came off to a weaker start, losing around 400 points in the first moments of trading.
“US stocks are extending last week’s largest drop of the year,” noted Charles Schwab analysts.
In China, the yuan dropped to its lowest level to the dollar since August 2010, fuelling speculation that Beijing was allowing its currency to decline to support exporters and offset Trump’s latest threat to hit 300 billion dollars in Chinese goods with 10 percent tariffs.
The US leader regularly accuses the Chinese central bank of artificially weakening the yuan – charges long denied by Beijing. (Agence France-Presse)
