US stocks fell sharply on Friday, extending the fourth consecutive weekly decline, after President Donald Trump lashed out at China for announcing fresh tariffs.
The Dow Jones Industrial Average closed down 2.6 per cent, losing more than 600 points to 25,628, after a series of tweets by the president. The Nasdaq dropped 3 per cent.
Trump called on US companies to consider alternatives to doing business in China. He also wrote on Twitter that he was “ordering” UPS, Federal Express and Amazon to block any deliveries from China of the powerful opioid drug fentanyl. All three companies’ stocks closed down more than 3 per cent as traders reduced holdings amid the uncertainty.
Early on Friday, China said it would retaliate against Trump’s previously announced tariff increases with taxes on US$75 billion of US products, which will become effective in two batches in September and December.
....your companies HOME and making your products in the USA. I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States. Also, I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE,....
— Donald J. Trump (@realDonaldTrump) August 23, 2019
The market recovered slightly in earlier trading after a widely anticipated speech by Federal Reserve Chairman Jerome Powell, who provided few surprises about when the central bank may cut interest rates again.
Speaking at a Fed policy conference in Jackson Hole, Wyoming, Powell noted that there was growing evidence of a global economic slowdown and suggested that uncertainty over Trump’s trade wars have complicated the central bank’s ability to set interest rate policy.
Powell stressed that the Fed “will act as appropriate to sustain the expansion”.
Markets have been jumpy for weeks as traders increasingly worry about a protracted trade war and whether it could tip the already fragile global economy into recession.
“There’s been reason to be concerned that this might not get resolved any time soon, but the market is accepting that not only is it not likely, it’s very unlikely,” said Randy Frederick, vice-president of trading and derivatives at Charles Schwab.
Technology and semiconductor companies accounted for some of the biggest losses. Chip maker Nvidia dropped more than 5 per cent and Apple lost 4.6 per cent.
US bond prices rose sharply as investors sought safety, sending yields lower. The yield on the 10-year Treasury fell to 1.52 per cent from 1.61 per cent, a large move. The price of gold, another safe haven for investors during times of market turbulence and economic weakness, rose 2.05 per cent to US$1,528 an ounce.
More from South China Morning Post:
- Donald Trump calls Xi Jinping an ‘enemy’ after China announces fresh tariffs on US$75 billion of US products
- Donald Trump’s trade war tariffs on China failing to bring jobs and manufacturing back to the US
- Donald Trump asks who’s the ‘bigger enemy’: Federal Reserve’s Jerome Powell or Xi Jinping?
This article Dow closes down more than 600 points after Donald Trump lashes out at fresh tariffs from China first appeared on South China Morning Post