Stocks drop after Trump says he's ready to step up trade war

People cross the road in front of an electronic board showing Hong Kong share index outside a bank in Hong Kong, Friday, July 20, 2018. Asian markets wobbled on Friday on signs that China and the U.S. were readying for the imposition of more tariffs on one another. (AP Photo/Kin Cheung)
People cross the road in front of an electronic board showing Hong Kong share index outside a bank in Hong Kong, Friday, July 20, 2018. Asian markets wobbled on Friday on signs that China and the U.S. were readying for the imposition of more tariffs on one another. (AP Photo/Kin Cheung)
People cross the road in front of an electronic board showing Hong Kong share index outside a bank in Hong Kong, Friday, July 20, 2018. Asian markets wobbled on Friday on signs that China and the U.S. were readying for the imposition of more tariffs on one another. (AP Photo/Kin Cheung)
People cross the road in front of an electronic board showing Hong Kong share index outside a bank in Hong Kong, Friday, July 20, 2018. Asian markets wobbled on Friday on signs that China and the U.S. were readying for the imposition of more tariffs on one another. (AP Photo/Kin Cheung)

SINGAPORE — World stock markets fell sharply Friday after U.S. President Donald Trump said he was prepared to put new tariffs on all Chinese imports, escalating the rhetoric in a trade war that could hit global economic growth.

KEEPING SCORE: From being up slightly earlier in the day, European indexes were trading lower. Germany's DAX fell 0.5 percent to 12,622 while France's CAC 40 dropped 0.7 percent at 5,377. Britain's FTSE 100 fell 0.3 percent to 7,661. U.S. indexes were poised to open lower, with S&P 500 futures down 0.2 percent and Dow futures 0.4 percent lower.

TRUMP TALK: Trump told the TV channel CNBC he was ready to exchange tariffs with China until all of China's exports to the U.S. — worth over $500 billion a year — are hit. "I'm ready to go to 500," he said. Asked if he would do it even at a cost of a stock market drop, he said: "If it does it does."

The comments come as the U.S. government is also considering taxing auto imports. Critics lined up this week to urge the administration to reject the tariffs, arguing they would raise car prices, squeeze automakers by increasing the cost of imported components and invite retaliation from trading partners — and allies — like the European Union and Canada.

ASIA'S DAY: Earlier, before Trump's comments were aired, most Asian markets finished higher. Japan's Nikkei 225 bucked the regional trend, losing 0.3 percent to 22,697.88. South Korea's Kospi added 0.3 percent to 2,289.19. Hong Kong's Hang Seng gained 0.8 percent to 28,224.48. The Shanghai Composite Index rebounded 2.1 percent to 2,829.27. Australia's S&P-ASX 200 increased 0.4 percent to 6,285.90.

YUAN DECLINES: The People's Bank of China set the Chinese currency's central parity rate to 0.9 percent weaker against the dollar on Friday. If the yuan continues to depreciate, goods exported to China will become more expensive to consumers there. Chinese exports would also be relatively cheaper, possibly balancing out suggested increases in tariffs by the Trump Administration.

ANALYST'S TAKE: "One theory is that the PBOC is depreciating the yuan because it has not enough ammunition to fight a dollar-for-dollar increase in tariffs. The markets are very risk-off. There is a loss in confidence right now," said Francis Tan, an economist at UOB Bank.

CURRENCIES: The U.S. dollar was trading at 112.45 yen, roughly unchanged from Thursday. The euro rose to $1.1651 from $1.1644.

OIL: Benchmark U.S. crude added 8 cents to $69.54 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, gained 6 cents to at $72.64.

Must Read

China says it can't end North Korea nuke program...

Sep 12, 2016

China says the United States has inflamed the conflict on the Korean Peninsula and must carry the...

Asia shares falter as investors watch dollar,...

Jan 6, 2017

Asian shares are wavering as a weaker dollar discourages investors who are shying away from risky...

China auto market has bumper year but 2017...

Jan 12, 2017

Industry figures show China's auto market had a bumper year in 2016 as sales grew by 15 percent,...

China exports shrink as Trump trade tensions loom

Jan 13, 2017

China's exports fell back into contraction again last month, signaling renewed weakness for the...

China state media call Trump's Taiwan strategy...

Jan 16, 2017

China's state-run media says President-elect Donald Trump "speaks like a rookie" and called his...

Sign up now!

Advertisement