Markets decline further on trade war worries

23/03/2018 07:10 AST

Wall Street’s selloff accelerated on Thursday morning, with major indices sinking two per cent ahead of an expected White House trade actions targeting China. Near 1540 GMT, the Dow Jones Industrial Average was down nearly 500 points, or 2.0 per cent, to 24,190.13.

The broad-based S&P 500 dropped 1.8 per cent to 2,662.29, while the tech-rich Nasdaq Composite Index tumbled 2.0 per cent to 7,196.73.

President Donald Trump was expected to announce actions around midday Thursday in response to alleged Chinese theft of US intellectual property. China has vowed to “defends its legitimate rights and interests, raising fears of a trade war.

The threat of a global trade war pushed the US dollar to its lowest in over a month on Thursday and dragged benchmark equity indexes in the US and Europe into the red, a day after the Federal Reserve raised interest rates as expected.

It was the dollar’s third decline in four sessions and helped sterling climb to a six-week high after a Bank of England policy meeting laid the foundations for another British rate increase in the coming months. The Fed raised its key rate by 25 basis points to a range of 1.50 per cent to 1.75 per cent on Wednesday and flagged at least two more increases for the year, short of the three that some economists had been predicting.

China also nudged up its borrowing costs overnight, as Beijing braced for fresh tariffs to be announced on Thursday by US President Donald Trump on Chinese imports worth as much as $60 billion.

Those jitters, plus weaker-than-expected German business confidence data, caused European shares to fall 1.7 per cent to a two-week low. Selling pressure intensified in morning trading on Wall Street. The Dow Jones Industrial Average fell 340.32 points, or 1.38 per cent, to 24,341.99, the S&P 500 lost 34.8 points, or 1.28 per cent, to 2,677.13 and the Nasdaq Composite dropped 101.62 points, or 1.38 per cent, to 7,243.67.

Shares in US tech giant Facebook fell 1.6 per cent in morning trading, in the wake of news Chief Executive Mark Zuckerberg apologized for a “major breach of trust” over how it had handled data belonging to 50 million users.

The Gulf Today