So where now for global markets in the coming week after trade tensions rose in the wake of President Donald Trump’s new attacks late last week on China and Amazon.
Friday night saw Eurozone shares loose 0.5% while the US S&P 500 fell 2.1% on the back of Trump’s latest tariff threat.
Markets in Asia were also weak, although the Australian market mostly ignored Trump’s escalation of his tariff threat by adding another $US100 billion of Chinese exports to his list (making the total more than $US130 billion).
The ASX 200 lost 1.1 points on Friday to 5886.9 and leaving it half a per cent higher for the week.
That will be erased when trading resumes later this morning after the weak global lead on Friday night saw ASX 200 futures fall 33 points, or 0.6%.
US shares were down after Friday’s sharp slide, but other markets still managed a modest rise with Eurozone shares up 1.1% and Japanese and Australian shares up. Chinese shares fell 1.1%.
Wall Street ended the week with Friday’s deep selloff, leaving stocks lower as the Trump’s latest trade bluster rattled global financial markets.
The S&P 500 Index plunged more than 2% and all 30 members of the Dow Jones Industrial Average fell as President Donald Trump ordered a review of additional tariffs that prompted an aggressive response from China.
Trump said the market turmoil was short-term “pain," but claimed the outcome would leave the US in a better position.
Bloomberg reported that the president’s top economic adviser, Larry Kudlow said the US and China are holding “back-channel discussions” to resolve an escalating trade dispute that has unsettled global financial markets.
China however had earlier said no talks were ongoing.
In a note to investors on Friday, ratings group Moody’s warned that while the direct impact of the tariffs on the US and China would be manageable, any sustained escalation in tension would increase volatility in financial markets and be negative for business and investment decisions.
“We continue to believe that the US and China will avoid a dramatic increase in trade restrictions, given the detrimental impact such an increase would have on both economies,” Moody’s said. “Still, the risk of escalation has risen during the past few months.”
The tensions overshadowed the weaker than forecast jobs report for March.
The S&P 500 fell 2.2% (it was down nearly 3% in early trading), turning a weekly gain as at Thursday’s close into a 1.4% drop in the week to Friday. In fact the S&P 500 is again approaching the 10% fall level which signifies a correction from its most recent peak.
The Nasdaq Composite Index slid 2.3% on Friday and the Dow lost 2.3%.
The Dow was down 0.7% for the week and Nasdaq lost 2.1%.
Treasury yields, which move inversely to price, fell as investors plumped for the relative safety of government debt.
The yield on the benchmark 10-year US Treasury was down 5.7 basis points at 2.77%, but this level is still about 3 points higher than at the end of last week.
