European shares fell on Friday after US President Donald Trump furiously reacted to China’s latest imposition of tariffs on certain US goods, while a lack of direction in the US central bank’s rate outlook somewhat frustrated investors.
In a surprise move, Beijing imposed additional tariffs on thousands of US products effective on Sunday next week, infuriating Trump, who hit back asking US companies to start looking for alternatives to their China operations.
“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing ... your companies HOME and making your products in the USA,” Trump said as part of a series of tweets.
Markets reacted sharply to those developments, with Wall Street indexes shedding more than 1 percent and the pan-European STOXX 600 ending 0.7 percent lower after a volatile session.
The benchmark index still rose 0.5 for the week, its first gain in four weeks.
Germany’s trade-sensitive DAX fell 1.2 percent on Friday, but was up 0.4 percent for the week.
Trade-sensitive autos, mining and tech stocks were the biggest losers across Europe on Friday, while defensive real-estate stocks were the only ones in positive territory.
European equities have seen wild swings this month amid fears that the economic effects of the trade dispute could tip major economies into recession.
“The trade war will only get uglier and cause both sides more economic pain before we see a final resolution,” Oanda Corp senior market analyst Edward Moya said. “Trump is going to try to gather as many chips as he can to try and punish China before settling on a deal that appeases a majority ahead of the 2020 US presidential elections.”
US Federal Reserve Chairman Jerome Powell’s latest comments also came under Trump’s attack as the US president asked whether his appointee to the central bank was a greater “enemy” than Chinese President Xi Jinping (習近平) to the US.
Powell, in a much anticipated speech at an economic symposium at Jackson Hole, Wyoming, said that the US central bank would “act as appropriate” to keep the economic expansion on track, but did not offer a clear indication on interest-rate cuts.
“His statement wasn’t as clear as we hoped it would be, but it was enough to show that he was at least leaning towards a rate cut in September,” Rabobank NV senior US strategist Philip Marey said.
London’s FTSE 100 had its fourth straight week of losses as it fell 0.3 percent, the longest streak since February.
Oil majors Royal Dutch Shell PLC and BP PLC had the biggest negative impact on the day.
Among individual stocks, Kloeckner & Co shares jumped 7 percent after a newspaper said Thyssenkrupp AG was in talks to buy the metals distributor.
Peppa Pig owner Entertainment One Ltd hit a life-high after agreeing to be acquired by Hasbro Inc.
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