China calls Trump's new tariff threats "blackmail"

Wall Street reels as US-China trade spat and falling oil prices spook investors

Wall Street reels as US-China trade spat and falling oil prices spook investors

The Nasdaq composite fell 21.44 points, or 0.3 percent, to 7,725.59.

Industrial and technology companies took some of the worst losses as investors anxious that the dispute could grow more intense and drag down global economic growth.

The dollar index .DXY , which tracks the greenback against a basket of major currencies, was last up 0.24 percent at 95.02 after earlier reaching 95.296, its highest since last July.

"While President Trump announced that his team is working on plans to impose 10 percent tariffs on $200 billion worth of Chinese exports to the us, the big question is whether China will retaliate beyond trade and target USA business interests in China", said Deutsche Bank China Chief Economist Zhiwei Zhang in a statement. With bond yields falling, some investors bought high-dividend companies like utilities and companies that make and sell household goods. They have also tried to crack down on China's huge shadow banking sector in which murky forms of lending are kept off banks' official balance sheets.

Washington rescinded a ban on sales of US technology to ZTE after the company agreed to pay a $1 billion fine and hire American-picked compliance managers.

The declines weighed on the S&P industrials index .SPLRCI , which fell 2.1 percent, its biggest one-day percentage drop in almost two months.

Big industrial companies and chemical makers are hard hit. The blue chip CSI300 index fell 3.6 percent to 3,621.12.

Canada has pledged $16.6 billion in countermeasures to respond to US tariffs on Canadian steel and aluminum. Stocks tumbled almost 3 percent in Hong Kong, 2 percent in Tokyo and 4 percent in Shanghai.

US crude fell 1.15 percent to $65.09 per barrel and Brent was last at $75.10, down 0.32 percent.

Futures on main euro zone benchmarks were trading down 0.2-0.5 per cent as investor angst about the outlook for economic growth filtered through to European stocks.

"There are trade frictions not only between the USA and China but also between the US and its allies". The Russell 2000 index of smaller stocks is building on the record set Tuesday, up 11 points, or 0.7 percent, to 1,705.

China said it would retaliate immediately by slapping duties on American export products, including crude oil, and suspend all previous trade agreements with Trump's administration. He added he would identify an extra $200bn of goods - for a possible total of $450bn, or most Chinese imports - "if China increases its tariffs yet again". With Canada, Mexico, the European Union and China all promising retaliatory measures at the same time, America's retailers, farmers, autoworkers and American employees throughout the global value chain are at risk.

Further market falls could also trigger a vicious cycle of selling, as a large proportion of shares in China's stock market are pledged against loans, and could potentially face margin calls, he said.

The Russell 2000 index fell just 0.22% in midday trade as it's made up of small-cap stocks which are closely tied to the U.S. economy and have less exposure to the worldwide market.

That sent interest rates lower and bank stocks dipped as well.

Its Hong Kong-listed shares tumbled 25 percent to a two-year-low, while its Shenzhen shares fell by their daily limit of 10 percent for a fourth consecutive session.

"This is a trade dispute - nothing more, nothing less", Navarro says.

U.S. President Donald Trump threatened on Monday to impose a 10 percent tariff on $200 billion of Chinese goods, escalating a tit-for-tat trade war with Beijing. China, claiming the USA had "launched a trade war", retaliated immediately, outlining its own tariffs on United States goods worth $50 billion, including agricultural goods, cars and marine products.

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