Stocks fall as China announces new tariffs on US imports

Stock markets fell after China announced new tariffs on some US imports, dialling up trade tensions between the world’s two largest economies.

Beijing said on Friday it would apply additional tariffs of between 5 and 10 per cent on $75bn of US imports from September, marking the latest escalation in the tit-for-tat trade war between the two countries.

The S&P 500 opened 0.5 per cent lower, while the Stoxx Europe 600 was down 0.1 per cent, giving up its gains for the day following the trade news from Beijing.

US government bonds yields fell slightly, reversing earlier gains, as traders moved into the debt, which is regarded as a safety play in times of market stress.

The new Chinese tariffs came as traders awaited further pointers from the US Federal Reserve’s annual summit, with chairman Jay Powell due to make the keynote address.

Markets will be watching closely for clues on monetary policy, hoping the Fed will add to its July rate cut with another one in September. Two Fed officials indicated on Thursday they would not support further rate cuts, however.

Meanwhile, China’s onshore renminbi, which is permitted to trade 2 per cent either side of a daily midpoint set by the country’s central bank, earlier in the day weakened as much as 0.2 per cent against the dollar to its lowest since March 2008. That put the currency on track for its biggest one-month fall in over a year as the renminbi has weakened more than 3 per cent in August.

The People’s Bank of China allowed the currency to weaken past Rmb7 to the dollar level in early August, sparking a further escalation in trade tensions and leading the US to brand the country a currency manipulator. The less-regulated offshore renminbi, meanwhile, weakened 0.1 per cent to its lowest level in more than a week.

Asia-Pacific equities notched modest gains, with Japan’s Topix up 0.3 per cent and the Hang Seng index adding 0.5 per cent in Hong Kong.

Top markets stories

Markets Briefing is a concise look at global markets, updated throughout the trading day by Financial Times journalists in Hong Kong, New York and London. Feedback? Write in the comments below or send us an email.

[optin-cat id=7010]