Trade war fears hit markets hard

The Trump administration plans to use new targeted tariffs to apply “maximum pressure” on China to stop it stealing the intellectual property of American business, according to the top US trade official.

Wall Street’s S&P 500 falls by over 1% in opening trade on trade dispute concerns, with Dollar extending losses and investors buy into US government debt, hitting yields. Practically, Wall Street was sucked into a global sell-off after comments about the Trump administration’s plans to use new targeted tariffs deepened concerns over the outbreak of a global trade war. The Dow Jones Industrial Average and Nasdaq Composite were each down 1.2%.

President Trump’s trade barriers are causing concerns for the Fed, where policymakers believe these measures will put a break on growth and the market seems to agree. Important to say that investors are also absorbing the implications of the latest policy meeting of the Federal Reserve, which delivered a ‘dovish hike’ at its meeting on Wednesday.

The dollar fell to one-month lows against a currency basket, after the Federal Reserve raised interest rates, but stuck to its forecast for two more hikes this year.
Some investors had expected the Fed to project three more rate hikes this year so the decision to stick to its forecast for two additional hikes was seen by some as less hawkish than expected.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.2% to 89.12, its lowest level since February 19. The index fell 0.74% on Wednesday, its largest one-day decline since mid-January.

Asian markets closed mostly lower, with bourses in the region giving up early gains to close in negative territory.

Sources: 

https://www.ft.com/content/f78ec216-2d7a-11e8-a34a-7e7563b0b0f4

https://www.ft.com/content/8c107278-2dd4-11e8-a34a-7e7563b0b0f4

https://www.ft.com/content/8c107278-2dd4-11e8-a34a-7e7563b0b0f4

https://www.ft.com/content/b5563b96-2d2e-11e8-9b4b-bc4b9f08f381

https://uk.investing.com/news/stock-market-news/stocks-us-futures-fall-as-trump-set-for-chinese-tariffs-1089921

https://uk.investing.com/news/economy-news/top-5-things-to-know-in-the-market-on-thursday-1089859