Markets fall on Trump threat to raise China tariffs

Markets fell on Monday.

Early in the day, Asian markets fell sharply after US President Donald Trump tweeted on Sunday that he would raise tariffs on US$200 billion worth of Chinese goods from 10 percent to 25 percent this week. The Shanghai Composite plunged 5.6 percent.

European markets followed Asian markets lower, the STOXX Europe 600 declining 0.9 percent.

However, the S&P 500 managed to recover from early sharp losses to finish 0.5 percent lower.

Many analysts see Trump's threat as merely part of negotiation tactics and think that a deal will still be reached.

“I don’t think it’s a setback at all. It’s all sort of a posturing position,” said Patrick Palfrey, senior US equities strategist at Credit Suisse.

“The President’s negotiating tactics may be unconventional but the likelihood of some kind of deal is still higher than nothing getting done,” writes Tobias Levkovich, chief US equity strategist at Citigroup.