New US tariff threat on Chinese goods hits stocks, dollar
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A weaker dollar lifted gold prices and the price of most industrial metals slipped as the tit-for-tat dispute has fueled concerns that demand for metals will weaken. Photo: AP A weaker dollar lifted gold prices and the price of most industrial metals slipped as the tit-for-tat dispute has fueled concerns that demand for metals will weaken. Photo: AP
NEW YORK – A gauge of global equity markets eased and the dollar slipped on Monday as investors took a dim view of an expected new round of tariffs from Washington on Chinese goods, which would escalate a simmering US-Sino dispute over trade.
US President Donald Trump was expected to announce new tariffs on $200 billion in Chinese goods as early as Monday, and China has said it would retaliate.
A weaker dollar lifted gold prices and the price of most industrial metals slipped as the tit-for-tat dispute has fueled concerns that demand for metals will weaken.
Apple and Amazon.com bore the brunt of investor worries about the tariffs, which were on a list unveiled in July that included $200bn worth of internet technology products, other electronics, printed circuit boards and consumer goods.
"Investors are slowly starting to realise that these new tariffs could be extremely disruptive to the supply chain," said Art Hogan, chief market strategist at B Riley FBR in New York.
Markets
The trade tiff has yet to be felt in US markets as the tariffs, which now are set at 3.8 percent, may rise to just 10 percent, which most companies can handle in a growing economy, said Brian Nick, chief investment strategist at Nuveen.
MSCI's gauge of stocks across the globe shed 0.23 percent while the pan-European FTSEurofirst 300 index of leading regional shares rose 0.05 percent.
The dollar's weakening is a good sign for global markets, especially in emerging markets where the strong dollar has been a cause for concern, Nick said.
The greenback has benefited from safe-haven flows as the US-Chinese trade conflict worsened.
The dollar index fell 0.4 percent and the euro rose 0.48 percent to $1.1684. The Japanese yen strengthened 0.05 percent versus the greenback at 112.02 per dollar.
US Treasury yields rose across the board on growing expectations the Federal Reserve would raise interest rates in September and December, and perhaps at least twice more in 2019.