Stock markets on both sides of the Atlantic staged a fightback yesterday, paring heavy losses sparked by a raging US-China trade war over the past week.
World oil prices bobbed higher on concerns about tensions in the crude-rich Middle East, dealers said.
“Equities are attempting to claw back some lost ground,” noted analyst Chris Beauchamp at trading firm IG, “but the overall atmosphere of caution still prevails”.
On Wall Street the Dow gained around 100 points, or 0.4 per cent, at the opening bell, having lost a whopping 2.4 per cent on Monday when the tech-heavy Nasdaq plunged 3.4 per cent.
“US stocks are recovering from yesterday’s drop in early action, which was the largest one-day fall since January, with the escalated trade tensions between the US and China continuing to be eyed,” Charles Schwab analysts said.
They added, however, that President Donald Trump’s statement that a meeting next month with Chinese President Xi Jinping would be “successful” gave investors some hope for a peaceful resolution of the trade standoff.
Earlier, Asian markets sank further, in reaction to Monday’s United States stock plunge, seen after China hiked tariffs on $60 billion of US imports.
That has ramped up sizzling tensions in a trade war between the world’s two biggest economic powers.
The latest move by Beijing was followed by a warning of further action such as dumping United States Treasuries and came days after Washington more than doubled levies on $200 billion of Chinese goods and Trump said he was looking at more than $300 billion more.
“Asian markets remained under pressure, and while United States futures are looking more positive the escalating trade war is still driving bearish sentiment,” added Beauchamp.
“Ironically, of course, the tariffs imposed by both sides will hit consumers, so as in all great contests this is turning into a test of endurance, with the US and China each looking to derive the maximum impact from the increased charges in a bid to hit their opponent where it hurts.”
The China-US trade conflict has sent shockwaves through trading floors, where most dealers had a little over a week ago been confident the two sides were close to a deal.
After announcing the higher tariffs, the editor of the Communist Party-owned Chinese newspaper Global Times warned Beijing could also hit the US by offloading Treasuries, ending US agricultural purchases and reducing orders for Boeing airplanes.
However, while there is a lot of fear about an all-out trade war, which could batter the world economy, both said talks will continue, though no date has been set for the next round.
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