China warns US over tariffs, as emerging market fears grow – as it happened

All the day's economic and financial news, as emerging market shares and currencies slide

• Latest: China warns US not to impose new tariffs
• Some EM currencies are rebounding
• Introduction: Emerging market selloff has alarmed investors
• Rupee hits record low
• Economists fear sell-off will continue

8.31pm BST

And finally, here's our latest piece on the US-China trade dispute:

Related: China 'will retaliate' if US imposes new tariffs on $200bn of goods

3.34pm BST

The ISM report also shows that the US-China trade spat is pushing up costs for companies.

One executive at a construction firm warned:

"Tariff-related cost increases are beginning to accelerate, whether tariffs have been put into effect or not."

"Based on current trends on customer quote requests and conversions to orders, we are trending for this month to be the best August in the history of our company."

3.13pm BST

America's service sector grew strongly last month, according to the latest PMI report from the Institute of Supply Management.

The ISM Services index jumped to 58.5 for August, up from 55.7 in July, signalling faster growth.

US ISM Services Index at 58.5 vs 55.7 previous, expected 56.8.

The economy is clearly booming

Like the ISM Manufacturing Index earlier this week, the ISM Non-Manufacturing Index surged in August, up +2.8 points to a solid 58.5. New orders rose +3.4 points to 60.7. Broad economic growth momentum appears to be still on track. pic.twitter.com/fpvoiLvRip

2.52pm BST

Wall Street has opened cautiously, with the Dow Jones gaining 72 points or 0.3%.

Facebook and Twitter are lagging, though, as the fallout from yesterday's Congress investigation into social media, and foreign interference in elections.

Now that we're open here's a look at today's stocks. $AMZN -0.96%$GOOG -1.08%$AAPL -0.53%$FB -1.33%$V +0.16%$MA +0.30%$BABA +0.27%$NFLX +2.70%
The #DOW remains positive but the #NASDAQ and #SandP both negative.

2.18pm BST

Trade war and emerging market jitters are weighing on the City today.

The FTSE 100 is down 10 points, or 0.1%, having closed at a four-month low yesterday.

Related: Energy bills to be cut by around 75 for more than 11m households

1.47pm BST

Some better jobs news just arrived: the number of Americans signing on for unemployment benefit hit its lowest level in almost 50 years!

Initial claims for jobless benefits dropped by 10,000 last week to 203,000, the smallest number since December 1969.

Initial Jobless Claims (Lowest Since December 1969) pic.twitter.com/1YwoA6dpNq

1.30pm BST

Newsflash: American companies created fewer jobs in August than in July, and less than expected.

US payroll operator ADP has reported that 163,000 private sector jobs were created last month, down from 217,000 in July. Economists had expected a figure close to 190,000.

US ADP Employment Change (Aug) +163K versus +190K expected, previous +217K revised to +219K $USD $DXYhttps://t.co/VqezeQmAex pic.twitter.com/QzTrtsilPi

12.51pm BST

Some lunchtime reading: Joseph Stiglitz on how policymakers have failed to make the right decisions since the financial crisis a decade ago:

Related: Why all economists must learn lessons before next US downturn | Joseph Stiglitz

11.30am BST

China has warned that it will retaliate if America imposes fresh tariffs on its goods.

"If the United States, regardless of opposition, adopts any new tariff measures, China will be forced to roll out necessary retaliatory measures."

Related: From eels to anvils: Trump's new China tariffs revealed

Related: China warns of tariffs on imported US goods worth $60bn

11.01am BST

The Economist Intelligence Unit's global economist, John Ferguson, believes emerging market tensions will continue to build over the next couple of years.

Here's his take on the EM situation:

10.54am BST

After days of losses, some emerging economy currencies are struggling off the mat.

The Argentina peso has gained 1.2% today, having hit a record low earlier this week.

EM turmoil moderates w/ exception of the Philippines. pic.twitter.com/DWtq9HXu96

The fundamentals didn't add up: we would firstly like to add a caveat that some EM assets are at risk from political and economic pressures (read Turkey), however justifying the ZAR [South African rand] sell off when SA's current account deficit is lower than the UK's right now isn't a good investment decision.

Also, political risk is not just the preserve of the emerging market space, take a read of today's New York Times' anonymous op-ed from a Trump cabinet member and you will see how close the US is to a constitutional crisis.

Related: Trump cries 'treason' as senior official attacks president in anonymous NYT op-ed

10.35am BST

The EM selloff has pulled world stock markets down for the fifth day in a row.

As global monetary conditions slowly tighten, the global economic cycle rolls over and the US President disturbs the global trade cycle, there's definitely more to the emerging markets sell-off than a few unrelated spots of weakness.

Crashes in the Argentine Peso and Turkish Lira were first believed to be idiosyncratic risks that wouldn't lead to any spillover. But now it looks like the concern over contagion risks are spreading to all asset classes. EM equities entered into a bear market, falling 20% from their January peak.

The Indonesian Rupee, Indian Rupee, South African Rand, and several other EM currencies are either trading at record or multi-year lows.

9.55am BST

Germany's industrial belt has taken another hit from the US-China trade war:

German industrial orders shank by 0.9% in July, new figures show, driven by a drop in overseas demand.

German factory orders unexpectedly fall for a 6th month this year amid a slump in investment-goods demand from abroad https://t.co/DP99V7xUFx via @johnainger #tictocnews pic.twitter.com/bNJPFDrtDY

Domestic orders increased by 2.4% and foreign orders decreased by 3.4% in July 2018 on the previous month.

New orders from the euro area were down 2.7%, new orders from other countries decreased 4.0% compared to June 2018.

German factory orders failed to recover in July with another decline. Trend in investment goods is deeply negative - as are orders from EUR and rest of world. On the positive side, domestic orders are recovering and trend in durable goods orders is strong #germany #macrobond pic.twitter.com/ZQe3lZiudc

9.00am BST

European stock markets have hit a five-month low this morning.

The emerging markets rout, and fears of an escalating trade war, drove the Stoxx 600 index down to its lowest since early April.

8.44am BST

Newsflash: The Indian rupee has dropped to an all-time low, as the emerging market currency selloff continues.

8.33am BST

Last night, the Financial Times calculated that emerging markets are now officially in a bear market -- defined as falling 20% from their recent high.

Capital Economics fears that the emerging market rout has further to run:

We think that the US Federal Reserve will press ahead with its tightening cycle, and worries about contagion from the crisis in Turkey may linger.

At the same time, we expect China's economy to slow further, and are not anticipating a ceasefire in the US-China trade war any time soon.

8.23am BST

This snapshot of the markets, from Bloomberg TV, shows how stock markets have lost ground (first column).

The second column shows currencies dropping against the US dollar.

8.20am BST

Today's selloff has wiped more than 1% off the main Chinese stock index, the CSI 300.

Hong Kong's Hang Seng is down almost 1.5%.

8.06am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Related: Fresh wave of shares and currency sell-offs hits emerging markets

Asia stocks head for 1y low on trade & EM anxiety despite Dollar pulling back. Sentiment remains very cautious ahead of potential imminent trade war escalation. Indonesia's Rupiah advances BUT Philipinne Peso sinks w/ stocks. US 10y ylds steady at 2.9%, Bitcoin falls off a cliff. pic.twitter.com/3Tzki1q0YM

"People are looking closely at what's happening in emerging markets, at the trade war and the fact that the United States is likely to implement another wave of tariffs against China.

If you look at global growth, more and more signs are that it will slow in coming months."

European Opening Calls:#FTSE 7374 -0.12%#DAX 12027 -0.12%#CAC 5254 -0.13%#MIB 20623 +0.20%#IBEX 9284 -0.19%

Calls for a negative open come courtesy of downbeat trading on Wall Street, with the Tech sector sharply lower following testimony from Twitter and Facebook to US Congress.

The turmoil within emerging markets also continues, widening from Argentina and Turkey, dampening global sentiment even further all the while we await the US decision on additional China import tariffs.