Market Update & Important Indicators
The threat of a global trade war spurred turmoil in financial markets around the world as investors scrambled to assess a potential disruption to a rare period of synchronized global growth. The Dow Jones Industrial Average closed down 0.3% Friday, recovering most of its morning losses that stemmed from President Donald Trump's pledge a day earlier to impose stiff tariffs on steel and aluminium imports. His plan sent overseas stocks tumbling and was met with warnings of retaliation across Asia, Europe and North America. Japan's Nikkei ended the day 2.5% lower as steelmakers and car manufacturers came under pressure, while London's FTSE 100 returned to levels last seen in 2016. Despite staging a comeback, major U.S. indexes suffered their worst week since early February. Although the market scare over the tariffs at least temporarily abated, a number of other fears linger as investors reassess the prospects for continued global growth, brace for the possibility of a broader trade war and await the outcome of a parliamentary election in Italy. The Dow Jones Industrial Average ended Friday down 70.92 points at 24538.06, putting its weekly decline at more than 3%. The S&P 500 rose 0.5% and the Nasdaq Composite gained 1.1%, though the indexes posted weekly losses of 2% and 1.1%, respectively. The U.S. gold price ended the week higher, closing 0.4% stronger at 1322.60 US$/oz.
European stocks fell sharply as U.S. President Donald Trump's plans for tariffs on steel and aluminium imports sparked worries about potential trade tensions. The Stoxx Europe 600 index closed down 2.1% at 367.04. Italy was one of the worst-performing markets before Sunday's elections, with the FTSE MIB ending down 2.4%. Germany's DAX also performed poorly, falling 2.3%. France's CAC 40 ended down 2.4%, while losses for the U.K.'s FTSE 100 were not quite as big, down 1.5%. Spain's Ibex 35 was down 2.1%.
Stocks in Asia fell Friday, echoing losses on Wall Street, with a 2.5% fall in Japan's Nikkei Stock Average and a 1.5% loss for Hong Kong's Hang Seng, as worries grew over an escalation in trade protectionism. In Asia-Pacific trading, shares in Japan were worst hit as concerns raised by the tariffs combined with a stronger yen to spark selling. Markets in China, a country specifically targeted by the tariffs, soon bounced back from initial sharp declines. Stocks in Shanghai, where most of China's heavy industrials are listed, were down just 0.6%.
A recovery by Australian stocks the last 2 weeks was derailed by a 3rd day of regional declines, with the S&P/ASX 200 falling 1.2% this week. But that didn't even erase last week's gain while equities fell anew today on fresh overnight US selling–the latest round stoked by Trump's new steel and aluminium tariffs. The index dropped 0.7% today to 5928.9, similar to the past 2 days' declines. Resource stocks led this week's pullback in Australia as commodities prices retreated. Meanwhile, though financials also dropped for a 3rd day they managed a slight rise for the week.
The London Metal Exchange’s 3-month copper contract traded lower overnight, falling 0.3% to close at $6,898/t. The other base metals mostly finished lower. Tin prices finished down 0.9% to 21,569/t, whilst Zinc prices fell a further 1.7% to close at 3,358/t. Aluminium prices slid 0.6% to close at 2,139/t. Lead prices rebounded 0.2% to 2,442/t, whilst Nickel prices traded 0.1% lower to finish at 13,403/t.
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