Europe markets manage small gains as US-China trade war gets real
July 06 2018 11:19 PM
A man walks to the lifts inside the London Stock Exchange (file). The FTSE 100 closed up 0.2% to 7,617.70 points yesterday.


Global stock markets managed small gains yesterday, overcoming earlier wobbles prompted by China and the United States firing opening salvos in a trade war that pits the world’s two biggest economies against each other.
European markets crept back into positive territory towards the close, even as trade worries remained investors’ biggest concern, dealers said. US President Donald Trump on Friday rolled out tariffs on $34bn of Chinese goods in what Beijing called the “largest trade war” in economic history. 
In London, the FTSE 100 closed up 0.2% to 7,617.70 points; Frankfurt — DAX 30 ended up 0.3% to 12,496.17 points and Paris — CAC 40 closed up 0.2% to 5,375.77 points yesterday.
Wall Street gained on the back of a stronger-than-forecast employment report which helped US stocks recover from an early bout of weakness as midday approached in New York.
China added it had already imposed retaliatory measures on US goods without immediately providing precise details.
“By imposing tariffs on $34bn worth of US imports from China today and eliciting an immediate like-for-like response from China, US President Donald Trump is bringing the world close to a genuine trade war,” said Holger Schmieding, chief economist at Berenberg.
But in the end, European and US markets followed the example of Asian markets which gained as investors went bargain-hunting, dealers reported.
Tokyo stocks led the gains in Asia, closing 1.1% higher, with markets in Shanghai and Hong Kong up by around half a percentage point.
Li Daxiao, analyst at Yingda Securities, said news of the tariffs had already been priced in.
“After the US tariffs announcement, the negative news finally came out and has already been digested over recent weeks.
Therefore investors are not in as much of a panic as before, and the market sentiment will reverse,” said Li.
Stanley Chik, from Bright Smart Securities International in Hong Kong, said that “the impact of tariffs on economic growth appears limited for now, giving the market a breathing spell.”
But these could be just the first skirmishes in a long war, with financial markets worried about a knock-on effect on the wider global economy and the broader trading system.
Trump has threatened to impose tariffs on some $450bn of Chinese goods — virtually all of China’s exports to the US — as he seeks to advance his “America First” protectionist agenda.
Beijing has accused the US of “firing on the whole world” with the measures, pointing out that most of the Chinese goods under attack are made by companies with large foreign investment — including American.

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