US Stocks Hold Steady After Trade War Fears 'tidal Wave'

US stocks held firm Friday after world indices tumbled on trade war fears sparked by Donald Trump's huge tariffs on Chinese imports.

London, (UrduPoint / Pakistan Point News - 23rd Mar, 2018 ) :US stocks held firm Friday after world indices tumbled on trade war fears sparked by Donald Trump's huge tariffs on Chinese imports. Meanwhile in Europe, "equities are in the red, but well off their lows," said Mike van Dulken, head of research at Accendo markets.

The stabilisation in US stock indices came after Asian markets were sent reeling by Trump's announcement of levies on up to $60 billion of imports from China. The developments have fuelled fears that a strong recovery in the world economy could be thrown off course.

Trump's move just weeks after the White House announced stinging taxes on steel and aluminium products entering the United States, as the administration drives through with its America First protectionist agenda.

China responded by saying it was "not afraid of a trade war", and also released a list of potential tariffs on $3.0 billion worth of US goods, from pork to fruits and wine and including some steel and aluminium goods.

"A tidal wave of risk aversion engulfed financial markets on Friday," FXTM analyst Lukman Otunuga said, branding Trump's move as "bold and frightening". Adding to the uncertainty was news that Trump's national security advisor HR McMaster had stepped aside and been replaced by hawk John Bolton, a move that stunned much of Washington.

A vocal advocate of the Iraq war, Bolton has also championed pre-emptive strikes against North Korea and regime change in Iran -- making him an outlier even among Republicans. - Full impact still unclear - Fears of further escalation remain, with EU leaders warning they will maintain a threat to hit the United States with counter-measures as long as a metal tariffs exemption for Europe remained temporary.

Trade war fears sent many investors piling into the safe haven yen. The Dollar dropped below 105 Yen for the first time since Trump was elected president in November 2016. The greenback was down also against the euro.

Analysts warned, meanwhile, that the full impact of the moves by the United States and China may not yet be felt. "The effects are likely to be felt more strongly in the US and increase both consumer and producer prices, " said Hannah Anderson, global market strategist at JP Morgan Asset Management.

"Exports are extremely important to the Chinese economy, but have been trending less so in recent years and the US has been shrinking as a share of China's export market." Analysts said traders were also spooked by the fact China is the biggest buyer of US government bonds, which the US needs to keep its economic wheels greased.