Markets Fall as Trade War Fears Mount

Markets Fall as Trade War Fears Mount
Stock markets have fallen around the world in the wake of President Trump’s latest tariffs threat to China. The Dow Jones closed down almost 1.2% or 287 points after Asian and European markets fell sharply earlier.

Mr Trump has threatened to put tariffs on an extra $200bn (£141bn) of Chinese goods, sparking fears of a trade war. The US president said the tariffs would be imposed if China “refuses to change its practices”.

He condemned China’s “unfair practices related to the acquisition of American intellectual property and technology” and added: “Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong.”

The markets reacted badly with China’s Shanghai Composite faring the worst in Asia, ending the day down 3.8%.

In Europe, Germany’s Dax index was down 1.2% by the close and France’s Cac 40 had lost 1.1%. London’s FTSE 100 ended the day at 7,603.85, a fall of 27 points or 0.36%.

In the US, the losses on the Dow thrust the index into negative territory for the year, with firms with business in China, such as Boeing, driving the index’s sixth day of declines.

The S&P 500 and Nasdaq also fell, closing down 0.4% and 0.3% respectively.

“The fear from here is a continued back and forth, escalating trade penalties on both sides with a further negative impact on growth,” Stifel Chief Economist, Lindsey Piegza said.

Away from Mr Trump’s dispute with China, Russia said it would impose tariffs on certain American goods in response to the recent tariffs placed on steel and aluminium imports by the US.

Russia’s Economy Minister, Maxim Oreshkin, said the tariffs would target goods of which the Russians already had domestic equivalents.

Microsoft Staff Demand End of Border Patrol Contract

Microsoft Staff Demand Firm Ends Border Patrol Contract
The BBC News website are reporting that An open letter signed by more than 100 Microsoft employees has called on the tech giant to stop its work with US Border Patrol.

The call comes as the Trump administration faces intense criticism over the separation of children from their families at the Mexican border. The letter, posted on an internal message board and published by the New York Times, said the employees “refuse to be complicit”.

Microsoft has said its technology was not being used for “projects related to separating children from their families at the border”.

In a statement published before the employee letter surfaced, the company said: “Microsoft is dismayed by the forcible separation of children from their families at the border. Family unification has been a fundamental tenet of American policy and law since the end of World War II.”

However, the firm does have a $19.4m (£14.7m) contract with the US Immigration, Customs and Enforcement agency, known as ICE. In January, it posted information about how its cloud computing platform, Azure, was being used to facilitate data “security and compliance”.

The post read: “We’re proud to support this work with our mission-critical cloud.”

 

Investors Braced for Volatility

Investors Braced for Volatility
Donald Trump said it would be like Brexit plus plus plus, and for investors as they wake up to the news that Mr Trump has won the presidential election, the feeling will be very similar to that day in June.

american map and flag

The dollar is already weakening against “safe haven” currencies such as the Japanese yen. Sterling is also strengthening against the dollar and gold – the ultimate safe haven dump – is up in value by nearly 4%. US stock market futures – judgements on the direction of travel before the major markets open in America later today – have already been suspended as sell offs overnight led to a 5% fall – the limit before automatic brakes are put in place.

About half an hour into trading the FTSE 100 was down 1% – although that’s not as steep as the 3.5% that the futures market predicted as the results started coming in.

Two forces are in play. First, many investors are unclear about the economic direction of travel of a Trump presidency, both domestically and in the wider world. And second, Mr Trump has pledged to “tear up” international free trade agreements, a move which many believe will be bad for global economic growth.

2016 has been a remarkable year of volatility and uncertainty in the markets and for investors, as Britain’s exit from the European Union followed the stock market crisis in China. And, don’t forget, we are also in the middle of the biggest, untested monetary experiment ever attempted by central banks following the financial crisis – $12.3tn of quantitative easing, or money printing, to stop the world lurching into deep recession.

Investors and markets are no longer sure which way is up.