Markets fall amid renewed worries of trade war

Markets fell on Friday.

The S&P 500 plunged 2.2 percent, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 fell 0.4 percent.

Markets fell after the White House released a statement late on Thursday saying that President Donald Trump had asked the US Trade Representative to consider additional tariffs on Chinese products. China’s commerce ministry responded by saying that it will respond with countermeasures if needed.

“Today’s market reaction is a reflection of investor fears that the trade rhetoric will get a lot tougher before any negotiations between U.S. and China get going,” said Ryan Larson, head of equity trading at RBC Global Asset Management.

Still, some analysts remain hopeful that a trade war will be averted.

Richard Grace, chief currency strategist and head of international economics at Commonwealth Bank of Australia, said that “most of the tough trade tariff talk is unlikely to result in action that will upset global growth or even come to fruition”.

Similarly, Neil Wilson, senior market analyst at ETX Capital, said: “Both sides would prefer to negotiate a settlement.” However, Wilson added that “a full-blown trade war could result if the two camps back themselves into a corner”.