• China announced It would impose new tariffs on another $75 billion worth of U.S. goods, including autos.
• President Trump ordered American companies to “immediately start looking for an alternative to China”.
• Fed Chairman Powell said the central bank will “act as appropriate” to sustain the U.S. economic expansion.
European stocks closed lower as trade tensions between the world’s two largest economies heightened.
The pan-European Stoxx 600 closed provisionally about 0.7% lower, with most sectors in negative territory. Autos stocks suffered sharp losses by the close, slumping around 2%.
The Chinese state council said it decided to slap tariffs ranging from 5% to 10% on the additional imports in two batches, effective on September 1 and December 15. A 25% tariff will also be placed on U.S. cars and 5% on auto parts, with effect from December 15.
Following that announcement, President Donald Trump said he was ordering American companies to “immediately start looking for an alternative to China.” The U.S. leader urged postal carriers including FedEx and Amazon to “SEARCH FOR & REFUSE all deliveries of Fentanyl from China (or anywhere else!).”
Investors also digested remarks from Powell at the central bank’s Jackson Hole symposium. the Fed Chief said – “will act as appropriate to sustain the expansion,” a phrase he used several times in the recent past.
Powell’s remarks initially buoyed sentiment, but the latest trade escalation tipped sentiment to the downside. On Wall Street, the Dow Jones Industrial Average dived 370 points, while the Nasdaq and S&P 500 indexes were also sharply lower.
Back in Europe, Brexit uncertainty continues to cloud markets U.K. Prime Minister Boris Johnson was dealt a serious defeat Tuesday after Britain’s Supreme Court ruled his decision to suspend Parliament weeks ahead of Brexit was unlawful.
Brexit remains on the radar after U.K. Prime Minister Boris Johnson met with German Chancellor Angela Merkel and French President Emmanuel Macron this week for talks.
At the bottom of the European blue-chip index, Rockwool International’s stock tumbled nearly 16% after its second-quarter results.
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