Stocks in Europe and Asia fell sharply Friday while gold and the yen jumped amid mounting investor anxiety over trade protectionism.
U.S. President Donald Trump on Thursday announced to impose tariffs on steel and aluminum imports, prompting threats of retaliation across Asia, Europe and North America.
The Stoxx Europe 600 dropped 1.3% in morning trading with every sector in negative territory, following a 2.5% fall in Japan’s Nikkei Stock Average and a 1.5% loss for Hong Kong’s Hang Seng. The S&P 500 fell 1.3% Thursday and futures markets suggested it would decline a further 0.3% on Friday.
As investors sought safety, gold rose 1% to $1,317 a troy ounce and the yen strengthened 0.5% against the dollar, but government bonds were little moved. Investors are worried Trump’s stance could set off a wave of protectionist policies across the globe that will hurt businesses and the economy.
“Trump’s announcement not only increases the specter of a global trade war but also neatly highlights the fracturing of the global compact which has been in place over recent decades,” Greg McKenna, chief market strategist at currency trading platform AxiTrader, said in a note to clients.