NEW YORK - President Donald Trump jolted global stock markets Monday by threatening to hike tariffs on $200 billion of Chinese goods amid apparent setbacks in trade talks between the economic superpowers.
Equities in Asia, Europe and the US were a sea of red as Trump's remarks rekindled fears of a trade war with potentially devastating consequences for world growth.
Many markets, however, pared early steep losses as analysts suggested that Trump was playing a game of brinkmanship and would ultimately save ongoing trade talks.
But US officials late Monday said Beijing was "reneging" on commitments made in the talks, and confirmed the tariffs would more than double to 25 percent on Friday.
The Dow Jones Industrial Average shed 0.3 percent, closing at 26,438.48 recovering from a drop of nearly 1.8 percent earlier in the session.
"Investors are looking at it as just posturing because these tweets run in stark contrast to what the White House has been saying in the last week," said Jack Ablin of Cresset Wealth Advisors.
But after US markets closed, US Trade Representative Robert Lighthizer said there had been an "erosion in commitments by China," according to reports. And Treasury Secretary Steven Mnuchin said the negotiations were 90 percent complete but in recent days the talks went "substantially backward."
Eurozone stocks were in better shape at the end of the European trading day than at the start, but both Frankfurt and Paris were still over one percent down at the close.
The London market was shut for a public holiday.
Earlier, Asian investors took no chances, inflicting some of the worst falls on the region's exchanges, with Shanghai plunging more than five percent, and the Chinese yuan also taking a battering after the president threw a spanner into the high-level negotiations.
'QUITE THE SHOCKER'
US officials said they still expect a new round of talks to take place in Washington on Thursday and Friday.
The two sides have imposed tariffs on $360 billion in two-way trade since last year. But Trump and China's Xi Jinping agreed a truce in December, fueling a surge in global stocks for the past four months.
"The period of historic calm across global financial markets is staring at the prospect of a rude awakening," said Han Tan, market analyst at FXTM. "Risk-off sentiment has been the response to this swerve from Trump."
Stephen Innes at SPI Asset Management called Trump's tweet "quite the shocker" but also said it was probably prompted by "political posturing" and he still expects a deal.
Tom Cahill of Ventura Wealth Management said "It is disappointing that we would have this kind of dialogue this late in the game."
KEY FIGURES AROUND 4:50 A.M. TUESDAY, MANILA TIME
New York - Dow: DOWN 0.3 percent at 26,438.48 (close)
New York - S&P 500: DOWN 0.5 percent at 2,932.47 (close)
New York - Nasdaq: DOWN 0.5 percent at 8,123.29 (close)
London - FTSE 100 - Closed for public holiday
Frankfurt - DAX 30: DOWN 1.0 percent at 12,286.88 (close)
Paris - CAC 40: DOWN 1.2 percent at 5,483.52 (close)
EURO STOXX 50: DOWN 1.1 percent at 3,462.95 (close)
Shanghai - Composite: DOWN 5.6 percent at 2,906.46 (close)
Hong Kong - Hang Seng: DOWN 2.9 percent at 29,209.82 (close)
Tokyo - Nikkei 225: Closed for public holiday
Euro/dollar: UP at $1.1199 from $1.1198 at 2100 GMT on Friday
Pound/dollar: DOWN at $1.3097 from $1.3173
Dollar/yen: DOWN at 110.87 yen from 111.10 yen
Oil - West Texas Intermediate: UP 31 cents $62.25 per barrel
Oil - Brent Crude: UP 39 cents at $71.24 per barrel
source: news.abs-cbn.com
