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Stock Markets Tumble as Trump Makes Good on China Tariff Threat

Stock Markets Tumble as Trump Makes Good on China Tariff Threat

Analysts say many investors are anxious about escalating trade tensions between the US and China, after US President Donald Trump chose to impose heavy tariffs on a broad range of imports from the world's number-2 economy.

The Dow Jones Industrial Average dropped more than 700 points as of the market's close, while the S&P 500 fell 2.5 percent to its lowest point since early February.

Investors will also hear from a trio of Federal Reserve speakers, just two days after the central bank raised USA interest rates, but appeared to stick to a more cautious strategy for 2018 (http://www.marketwatch.com/story/fed-lifts-rates-in-powells-first-meeting-says-outlook-has-strengthened-2018-03-21).

Investors are anxious that trade tensions would hurt United States companies and harm the world economy.

The Dow and Nasdaq stock indexes had fallen as much as 2 per cent while the benchmark S&P was down as much as 1.85 per cent before midday, as investors fretted over the potential scale of U.S tariffs and possible impact on global trade.

The S&P 500 index tumbled 55.43 points, or 2.1 percent, to 2,588.26.

The S&P 500 index dropped 68 points, or 2.5 percent, to 2,643.

BONDS: Bond prices climbed, sending yields lower. "At face value, the tariffs on China would cover less than three per cent of total USA goods imports, similar to those on steel and aluminum".

The semiconductor sector took a fall after Micron Technology's (MU.O) quarterly report stoked fears about falling NAND prices. The S&P is down 3.2 percent year to date, while the Nasdaq Composite is hanging onto positive territory. US markets fell swiftly earlier this year when he imposed steep tariffs on steel and aluminum imports. (Nasdaq: FB) dipped more than 3% on the day, too. The Dow finished at its lowest point since November.

The S&P 500, a larger index of U.S. companies, is flirting with a correction, too.

The drop on Thursday was the largest since a historic 1,032-point drop in February, as the tariff announcement caused concern with investors. Still, Donisanu said that after last year's rally, investors are looking for new reasons to feel optimistic about stocks.

"We want reciprocal (trade)", Mr Trump said.

Major industrials slumped. Plane maker Boeing Co lost 5.2 per cent, Caterpillar Inc dropped 5.7 and 3M Co lost 4.7. Germany's main index lost 2.3 percent. "The strong USA and global economic and fiscal policy tail winds are starting to be overtaken by the proposed tariffs, the Fed's softer-then-expected economic outlook for 2018 and the fallout from the Facebook issue".

The Dow lost 5.7 percent this week, leaving it nearly 5 percent below the level where it was before Congress passed Trump's sweeping tax overhaul in late December. Tech shares have been under pressure lately amid a sharp decline in Facebook shares.

The dollar fell to 105.61 yen from 106.10 yen. Brent crude, used to price global oils, fell 56 cents, or 0.8 percent, to $68.91 a barrel in London. Core capital goods rose 1.8%, up from a 0.4% decline in January, and vs. estimates for a 0.7% gain.

Wholesale gasoline remained at $2.01 a gallon. Silver fell 3 cents to $16.39 an ounce.

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