Global stocks, United States dollar under pressure amid renewed trade war fears

Lester Mason
March 15, 2018

The trans-Atlantic rift over Trump's tariffs was evident in the European Union legislature in Strasbourg, France, where parties of just about all persuasions lined up to criticize the US plans.

The EU trade commissioner has warned the U.S. that if it is not excluded from Donald Trump's steel and aluminium tariffs it would be "very damaging for trans-Atlantic relations".

U.S. Trade Representative Robert Lighthizer said India had failed to remove the subsidies as required by WTO rules after the country reached certain economic benchmarks.

The negative momentum faded somewhat in Europe, with a pan-European equity index up 0.24% after falling 1% on Tuesday.

The dollar was modestly lower against its primary trading partners, declining 0.03 percent against the yen to 106.53, and trading at $1.2396 against the euro.

Adidas, the German sports fashion company, gained more than 11 percent on Wednesday after announcing a share buyback of up to 3 billion euros.

President Trump is expected to unveil a massive "package of tariffs" against China in the coming weeks, multiple sources close to the White House told Politico.

That left MSCI's all-country equity index down only marginally, its second day in the red and off one-month highs hit before news broke of Tillerson's sacking.

That would spook stock markets, but Scissors said the more serious the conflict became, the worse China's position would become, because of the importance of its USA trade surplus. Fixed asset investment also beat forecasts, while retail sales improved.

While a US rate rise next week is already priced in, Tuesday's data showing annual USA core inflation steady at 1.8 percent did not persuade markets the Federal Reserve would raise rates more than three times this year.

"There's trade war talk going on", said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. "The key question is, does the USA retaliate against that retaliation", said Derek Scissors, a China trade expert at the American Enterprise Institute, a pro-business think tank.

Another separate source with direct knowledge of the thinking by the administration said that tariffs, which are associated with a Section 301 investigation of intellectual property, under the U.S. Trade Act of 1974 that started past year during August, could come soon.

Central banks in Japan and the eurozone also stuck with their dovish message to markets.

Higher tariffs for those products would be hurtful to American families, said one trade lobbyist.

Other reports by Iphone Fresh

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