Trump's latest tariff move jolts stocks, oil, bond markets

NEW YORK: President Donald Trump's new tariffs on China sent a shockwave through global markets Thursday, pushing Wall Street stocks into the red, sharpening an oil-price rout and pressuring US Treasury yields.

Trump's early-afternoon tweet announcing the tariffs on another $300 billion in Chinese goods aborted an equity market rally following the Federal Reserve's decision Wednesday to cut interest rates for the first time in more than a decade.

Major US indices, which has been up more than one percent earlier in the day, did an about-face after Trump's tweet.

At the White House, Trump told reporters he was "not concerned" by the negative reaction among investors, saying he had anticipated it.

The Dow finished 1.1 percent lower at 26,583.42, losing more than 400 points following the tariff announcement.

The news prompted a broad-based selloff but fell especially hard on retailers such as Best Buy, which plunged 10.8 percent, Target, which tumbled 4.4 percent and Macy's, which sank 6.7 percent.

Amazon and Walmart, which are seen as having more clout with suppliers, also declined, but by less than one percent.

"What we are seeing here is a real decline in retail, so we know the decline is definitely related to the China tweet because the next round of tariffs is going to impact the consumer goods more than the previous ones," said Maris Ogg of Tower Bridge Advisors.

In directly hitting consumer goods, the latest tariffs could also crimp US consumer spending going into the holiday shopping season, a strong point in the American and global economy.

US Treasury yields fell sharply after the announcement, a sign of a weakening growth outlook.

The tariff news also prompted a sharp selloff in oil futures, with US benchmark West Texas Intermediate tumbling 7.9 percent to $53.95 a barrel, its worst decline in a session since February 2015.

Oil prices were in the red before the tariff announcement due to a stronger dollar. But Trump's latest action raised worries about lower petroleum demand in a weaker economy. The dollar retreated as well.

- Brexit weighs on outlook -

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The tariff announcement quickly changed the market's focus from the Fed's interest rate cut, described as insurance in case of weakening global growth amid uncertainty and trade tensions.

Some analysts had warned that the Fed move could embolden trade hardliners in the Trump administration to continue to push aggressive measures in the China talks.

The Bank of England left its key interest rate unchanged, warning of Brexit risks, and downgraded its growth forecasts for this year and next.

But some analysts said deep uncertainty about the terms on which Britain eventually leaves the EU undermined any attempt at solid forecasting.

"With the UK being three months from potentially exiting the EU without a deal, the BoE's hands were tied and their forecasts borderline useless," said Craig Erlam, senior market analyst at Oanda.

- Key figures around 2050 GMT -

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New York - Dow: DOWN 1.1 percent at 26,583.42 (close)

New York - S&P 500: DOWN 0.9 percent at 2,953.56 (close)

New York - Nasdaq: DOWN 0.8 percent at 8,111.12 (close)

London - FTSE 100: FLAT at 7,584.87 (close)

Frankfurt - DAX 30: UP 0.5 percent at 12,253.15 (close)

Paris - CAC 40: UP 0.7 percent at 5,557.41 (close)

EURO STOXX 50: UP 0.7 percent at 3,490.03 (close)

Tokyo - Nikkei 225: UP 0.1 percent at 21,540.99 (close)

Hong Kong - Hang Seng: DOWN 0.8 percent at to 27,565.70 (close)

Shanghai - Composite: DOWN 0.8 percent at 2,908.77 (close)

Pound/dollar: DOWN at $1.2140 from $1.2159 at 2100 GMT

Euro/dollar: UP at $1.1090 from $1.1076

Dollar/yen: DOWN at 107.40 yen from 108.78

Brent North Sea crude: DOWN 7.0% at $60.50 per barrel

West Texas Intermediate: DOWN 7.9% at $53.95 per barrel