Markets tumble on trade war fears, “time for a major correction”

Markets fell on Tuesday.

The S&P 500 fell 0.4 percent and the STOXX Europe 600 fell 0.7 percent

The biggest losses were in Asia. The Shanghai Composite plunged 3.8 percent and the Nikkei 225 tumbled 1.8 percent as investors became increasingly concerned about a trade war between the US and China after US President Donald Trump indicated his administration was looking to impose further tariffs on China.

“This latest escalation, if it materialized, would mean significant economic impact in China, the U.S. and elsewhere at a sensitive time for the global economy,” said Louis Kuijs, head of Asia economics at Oxford Economics, in a note.

Billionaire investor Jim Mellon thinks that the trade tension is coming at a bad time for the stock market.

He said that the trade tension is “certainly having an effect on the market, but the market is reacting because it's already far too expensive.”

“The U.S. is selling at 32 times cyclically adjusted price-to-earnings (PE) ratio, which is an all-time high,” he noted. “Surely it's time for a major correction anyway.”