US open: Stocks shaky as Trump slaps extra $200bn tariffs on Chinese imports
Wall Street trading began with losses right after the bell on Wednesday amid escalating tensions between the US and China, after President Donald Trump said his administration would slap tariffs on an additional $200bn of Chinese imports.
At 1530 BST, the Dow Jones Industrial Average had lost 0.63% to 24,761.49, while the S&P 500 was down 0.46% to 2,781.06 as the Nasdaq turned 0.30% weaker to 7,735.69.
SpreadEx analyst Connor Campbell said: "It was one of those days defined by one single, market-shaking event, the kind that actually end up being quite boring because of the rigidity of trading."
"All that is to say little changed as Wednesday went on, Donald Trump’s threats to $200bn of Chinese imports keeping the markets in a state of fear throughout the session. And while the Dow Jones didn’t fall quite as sharply as promised by its futures, the index still plunged 0.6% after the bell, taking it back below 24800, having hit three-week peak on Tuesday," added Campbell.
Overnight, US officials released a list of thousands of Chinese imports that will be hit with the additional tariffs, including hundreds of food products, tobacco, chemicals, coal, steel and aluminium. The list also includes a number of consumer goods, including car tyres, bicycles, furniture and handbags, that are due to be hit by a 10% tax as early as September, on top of the 25% tariffs on $34bn worth of goods that came into effect last week.
China will definitely take trade counter-measures and protect its "legitimate rights", the Ministry of Foreign Affairs told reporters.
Oanda analyst Craig Erlam said: "While this announcement has been expected ever since US President Donald Trump first hinted at such a response to Chinese retaliatory measures, it is a stark reminder that common sense is not prevailing - as many hoped - and the risk of a full-blown trade war is very real."
"Trump's relationship with US allies will certainly come into focus in the coming days. The Nato meeting over the next 48 hours will certainly be a tasty affair with Trump having repeatedly and publicly bashed other members for their contributions, particularly Germany who the US President has also targeted on trade," added Erlam.
In opening remarks in a meeting with Nato general secretary Jen Stoltenberg at the summit in Brussels, Trump accused Germany of being "captive" to Russia and described the relationship between the two countries as "inappropriate".
"I think it is very sad when Germany makes a massive oil and gas deal with Russia," Trump said. "We are supposed to be guarding against Russia, and Germany goes out and pays billions and billions [of] dollars a year to Russia."
In corporate news, 21st Century Fox lost 2.34% after upping its offer for the Sky shares it does not already own to £14 per share, trumping the latest offer from Comcast by around 12%. The offer for the London-listed broadcaster, which is up from a previous £10.75 per share, remains subject to the approval of the UK Secretary of State, which is due to make a final decision by Thursday.
Shares in technology group Nvidia Corp dipped 1.71% after it announced a partnership with Daimler and Bosch to test robot taxis late on Tuesday.
Facebook was up 0.08% after it emerged the company will be fined £500,000 by a UK watchdog over the Cambridge Analytica scandal.
On the data front, wholesale inflation in the US outpaced economists' forecasts in June, driven higher by dearer energy and services.
Final demand prices in the US advanced at a 0.3% month-on-month clip last month, according to the Bureau of Labor Statistics.
Energy costs continued to push higher, rising by 0.8% versus May, alongside a 0.4% increase in services' prices, which combined pushed the year-on-year rate of gain in total final demand prices from 3.1% to 3.4% - their highest level since 2011.
Food prices, on the other hand, declined by 1.1%.
Elsewhere, wholesale inventories in the US jumped 0.6% in May as companies increased production to match growing demands for their products.
Sales shot up 2.5% in the month, however, the ratio of inventories to sales dropped to 1.24 from 1.27.