Published: Thu, April 05, 2018
Money | By Ethel Goodwin

Dow dives 600 points as investors panic on Chinese tariffs

Dow dives 600 points as investors panic on Chinese tariffs

Asian stock markets were mixed in early trading Wednesday as investors pondered the latest volley of tariff measures and threats between the USA and China.

Wall Street shares have plunged as investors fled technology stocks amid resurgent trade war worries. The S&P 500 gained 0.27 percent to 2,588.82 and the Nasdaq Composite rose just 0.08 percent to 6,875.77. The Nasdaq composite slumped 2.7 percent to 6,870.12.

With the S&P 500 .SPX closing on Monday below its 200-Day Moving Average for the first time since the June 2016 Brexit panic, investors anxious that an important indicator of the bull market trend has been broken.

The Dow Jones Industrial Average dropped just over 1 per cent on Wednesday as big US manufacturers and chipmakers bore the brunt of a deepening trade conflict between China and the United States.

London's benchmark FTSE 100 index inched up 0.1 per cent to 7,034.93 points compared with the close on Tuesday. Tokyo Electron and Advantest slid 1.41 percent and 3.17 percent, respectively.

Traders react as they work on the floor of the New York Stock Exchange in New York, U.S., April 4, 2018.

China bumped tariffs by up to 25 percent on 128 USA products, from frozen pork and wine to certain fruits and nuts, in response to US duties on imports of aluminum and steel.

"There has been a lot of rhetoric surrounding trade wars for some time now, but the transformation of these threats into actions in recent days is alarming and is clearly roiling markets", said David Cheetham, chief market analyst at XTB.

The stock market correction has taken the Dow Jones down to an important intermediate-term support point - its rising "monthly" trend line off the 2016 lows (point 2).

The looming threat of tighter regulation of the tech sector in Europe and the USA prompted investors to pull money out of high-flying companies, such as Netflix, Microsoft and Alphabet, Google's parent company. So we can expect to see this trade war continue. The Dow Jones Industrial Average was down by 2.5% for the quarter. There are a number of points of contention between China and Washington, Europe and Japan over a state-led economic model they complain hampers market access, protects Chinese companies and subsidizes exports in violation of Beijing's free-trade commitments.

Amazon.com was the biggest drag on the S&P 500, down 5.2 percent, as President Donald Trump continued his twitter attacks on the online retailer.

The S&P closed 2.23 per cent down last night at 2,581.88 - more than 10 per cent below the peak it recorded towards the end of January.

After a bloodbath on Monday, US shares started on the front foot, with the Dow Jones up 125 points at 23,769. Coca-Cola climbed 1.8 percent and Johnson & Johnson added 2 percent.

US Treasury yields fell to two-month lows as investors fled sliding stocks for safety ahead of Friday's closely watched jobs report. CBS shares rose 0.9 per cent.

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