Stocks keep plunging amid ‘grave concern’

When markets opened in the US, the Dow Jones industrials and S&P 500 were sharply lower. (AFP)

NEW YORK: A global sell-off in stocks came back around to the US in morning trading Friday after President Donald Trump doubled down on “trade war” talk.
Trump took to Twitter to defend his promise from Thursday to impose stiff tariffs on imports of steel and aluminum, saying the US is losing on trade with virtually every country and that “trade wars are good” and “easy to win.”
Investors have a different impression. Markets tumbled in Asia, where China expressed “grave concern,” and spread to Europe, where the president of the EU’s governing body promised retaliation if Trump follows through. When markets opened in the US, the Dow Jones industrials and S&P 500 were sharply lower, following steep declines Thursday.
A trade war would threaten one of the key reasons investors were optimistic about stocks coming into 2018: That the global economy was finally strengthening in sync, which would lead to higher corporate profits. Big US companies are heavily reliant on global trade, which means investors in US stocks have only recently begun feeling the full benefit.
Companies in the S&P 500 got 43 percent of their sales from outside the US in 2016, according to the most recent data from S&P Dow Jones Indices. That means Apple and other big US companies are dependent on customers not only in Peoria but also Paris and Peru.
A “trade war is in no one’s interests,” said Roberto Azevedo, head of the World Trade Organization.
In Asia, Japan’s Nikkei 225 plunged 2.5 percent, the Hang Seng in Hong Kong fell 1.5 percent and South Korea’s Kospi dropped 1 percent. In Europe, France’s CAC 40 lost 2.2 percent, and Germany’s DAX fell 2.1 percent. The FTSE 100 in London gave up 1.2 percent.