Stocks, oil extend rout as China retaliates over Trump tariffs

LONDON: Equities and oil prices extended a global rout for markets on Friday (Apr 4) after China hit back over President Donald Trump’s tariff blitz with its own mammoth levy on United States goods, inflaming global trade war fears.

The dollar was steadier against main rivals having fallen sharply on Thursday on fears of a recession in the US.

“Sentiment is so fragile right now,” Chris Beauchamp, chief market analyst at online trading platform IG, told AFP.

“Investors are firmly in the ‘get me to cash now’ phase, on fears that other nations will follow China’s lead, and of course that the US president will respond to China’s tariffs with even more charges.

“This trade war is like nothing we’ve seen for years, perhaps decades,” Beauchamp added.

Frankfurt’s main DAX index of German blue-chip companies plunged more than 5 per cent moments after the Chinese government said it would slap 34 per cent tariffs on all imports of US goods from Apr 10.

Paris tumbled 4.2 per cent and London gave up 3.9 per cent in early afternoon deals.

Oil futures plummeted around 7 per cent, having already plunged about 6.5 per cent on Thursday on the prospect of weaker demand.

News that OPEC+ had unexpectedly hiked crude supply more than planned added to the steep selling.

The price of traded copper – a vital component for energy storage, electric vehicles, solar panels and wind turbines – tumbled more than 5 per cent.

Beijing on Friday also imposed export controls on seven rare earth elements, its commerce ministry said, including gadolinium – commonly used in MRIs – and yttrium, utilised in consumer electronics.

“Another jolt of fear has shot through markets as China’s threat of retaliation has materialised,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“The big concern is that this is a sign of a sharp escalation of the tariff war which will have major implications for the global economy.”