Wall Street and FTSE 100 sink as Trump intensifies trade war fears - as it happened
Rolling coverage of the latest economic and financial news, as US proposes steep new tariffs on French cheese, wine, handbags and porcelain
- Latest: Trump says China deal could wait until after 2020 election
- Trump says France shouldn't tax US companies
- Trump: If anyone takes advantage of US firms, it's us!
- Introduction: Trade war deepens
- French fizz, cheese, handbags all face 100% tariff
- France: We'll hit back
9.23pm GMT
And finally, the Dow has closed down 280 points at 27,501, a drop of almost 1%.
Volatility has returned in a big way to financial markets. Stocks are down and safe-havens are finding a bid, after US President Donald Trump suggested there's "no deadline for a trade-deal", and implied the trade-war could be prolonged into next year. Equity markets are returning to fundamentals now.
After several weeks of what's been appropriately described as a sense of complacency, volatility has returned to global markets to begin December. Having been highly suppressed, as traders became giddy on the prospect of a US/China trade-deal, the VIX (the "fear index") has spiked in the last 48 hours, climbing from a historically low 11 reading, to its current reading at 16.
8.42pm GMT
As US cash equity session winds down to final 30-minutes, various assets/instruments are proving to have a banner day:
- Chinese Yuan: worst day in three-months
- Gold & Silver: best day in two-months
- S&P 500: largest gap since August 14
- US 3m10s: down from 27-bps to 12-bps
7.57pm GMT
Robert Pavlik, chief investment strategist at SlateStone Wealth, thinks Trump's threat to delay a China trade deal is a calculated move, to bounce Beijing into concessions.
He says:
"This is sort of a last-minute negotiation tactic.
"If the December 15 tariffs go into effect, then I think people start thinking that this could have additional ramifications on a 'phase-one' ever getting done."
7.54pm GMT
7.35pm GMT
Almost every stock on the Dow Jones industrial average is in the red in late trading.
Basic materials, financial stocks and consumer-focused firms are dong worst, with tech companies and industrials close behind.
6.49pm GMT
The Dow is attempting to recover from its earlier losses, but is still down 313 points today at 27,469.
Still more than two hours of trading left, so there's time for a rebound - or deeper losses!
5.58pm GMT
Donald Trump's suggestion that a China trade deal could be delayed by a year could just be a ploy.
Chris Rupkey, chief financial economist at MUFG, explains (via CNBC):
"We have seen this movie many times before ... where the president throws out remarks during trade talks that in retrospect have just been a negotiating tactic, especially when he starts off by saying China wants a deal more than he does.
5.03pm GMT
London's losses today are partly due to a stronger pound, which is trading over $1.30 again tonight.
Connor Campbell of SpreadEx explains:
The FTSE's day was made that bit worse by the pound's own gains. The latest Kantar poll put the Tories 12 points ahead of Labour, contrary to many other surveys showing a shrinking Conservative lead.
4.42pm GMT
Ouch! Britain's FTSE 100 has closed at its lowest level since mid-October.
Renewed trade war anxiety sent the index down to 7,158, a loss of 127 points. That's a 1.75% slide, to a six-week low.
3.44pm GMT
Today's burst of trade war drama has been a wake-up call for investors who had hoped that the dispute was being ended peacefully.
Michael Hewson of CMC Markets explains:
It's been another choppy day for markets in Europe after an initially positive start. Once again it's been an intervention by President Trump that's upset the applecart, when in an impromptu question and answer session with journalists he held open the prospect that there would be no US, China trade deal, until after the US elections next year.
This insouciance about the prospect of putting off any deal has completely upended market expectations that we were potentially millimetres away from a deal, and also flies in the face of the optimism that has seen markets rally strongly over the last few weeks.
3.38pm GMT
CNBC's Michelle Caruso-Cabrera is losing faith that China and the US will ever reach a trade deal....
"I'm getting more convinced that maybe you never have a deal, even after the election," says Michelle Caruso-Cabrera after President Trump's comments sent futures lower this morning. pic.twitter.com/huTaaHrCWd
3.33pm GMT
All these negative headlines on trade have knocked China's currency to its lowest level since October, as Bloomberg's Katherine Griefeld points out here:
USDCNH squeaks past its 50- and 100-dma to ~7.068, the yuan's weakest level since October pic.twitter.com/ZtYXTynoX4
3.32pm GMT
Wilbur Ross, Donald Trump's commerce secretary, has just dampened hopes of a trade breakthrough with China.
Ross has told CNBC that delaying a trade deal with China until after the 2020 election could make sense, as it "takes leverage away" from Beijing. That chimes with Donald Trump's comments in London earlier.
U.S. COMMERCE SECRETARY ROSS SAYS THERE WILL BE NO BREAKTHROUGH ON U.S. CHINA TRADE TALKS UNTIL DEAL IS SIGNED IN BLACK AND WHITE -CNBC
Follow the story live: https://t.co/m2JBwOmVug
3.23pm GMT
Wall Street is having a seriously bad day now, with the Dow shedding 421 points or 1.5%.
US futures taking a shellacking now:#DOW 27387 -1.47%#SPX 3076 -1.25%#NASDAQ 8185 -1.57%#RUSSELL 1594 -0.95%#FANG 2794 -2.09% pic.twitter.com/oqMxhDwbCs
3.08pm GMT
Donald Trump and Emmanuel Macron's press conference in London is one of the most awkward such events we've seen in a while.
At one stage, Trump even patronised Macron for giving a classic "non-answer", when the French president talked about the importance of eradicating ISIS.
Well that was awkward. Barely polite sparring between Trump and Macron. T puts M on the spot by challenging him to accept French Isis fighters. M countered by stressing how the Isis threat was still there, and there were "more and more" fighters in the region. Not Trump's line.
"We've taxed wine and we have other taxes scheduled. We'd rather not do that, but that's the way it would work. So it's either going to work out, or we'll work out some mutually beneficial tax,.
The tax will be substantial, and I'm not sure it's going to come to that but it might."
After Trump touts his relationship with Erdogan, calling it a good one, Macron rips into Turkey for its purchase of the Russian missile defense system, saying it's not compliant with the NATO alliance and they could have purchased a European one.
2.57pm GMT
Donald Trump has sent another shiver through the markets, as he tells reporters in London that Europe isn't trading fairly with the US.
The US president says his country "cannot continue to lose the money that it has lost" since the EU was created.
We have an unfair trade situation with the EU.
2.44pm GMT
Ouch! America's stock market has fallen 1% at the start of trading in New York.
2.43pm GMT
Trump then repeats his earlier argument that it's wrong for France to tax US companies, through its digital services tax.
[America's complaint is that the French plan is based on the revenues of US tech firms, not simply the profits they make in France]
2.36pm GMT
Newsflash: Donald Trump and Emmanuel Macron are holding a press conference at the NATO summit now.
Trump seems to be trying to calm the tariff row, telling reporters that "we have a very good relationship with France".
Breaking - Trump says a lot of progress has been made in talks with French president Macron
Trump and Macron speaking in London ahead of NATO 70th anniversary summit. The U.S. President on proposed 100% tariffs on French goods: "We have a minor dispute. We'll probably be able to sort it out."
On NATO, "a lot of countries have stepped up", Trump says.#natosummit pic.twitter.com/N0pcggGGSW
2.31pm GMT
France's wine and spirits industry is calling on Emmanuel Macron to help.
Antoine Leccia, chairman of trade body FEVS says the threat of champagne tariffs at the US border must be pushed back:
"For six weeks now, our companies have been strongly affected by the Airbus litigation. We must avoid creating new problems.
"We therefore solemnly call on the President of the Republic to take, from today, all the necessary initiatives, at national, bi-lateral and international levels, so that our sector does not pay the price of the economic and political choices made by France".
2.13pm GMT
A EU delegation to the US says it will seek "immediate talks" on how to resolve the dispute over France's digital service tax, Reuters reports.
2.12pm GMT
If you missed it earlier, here's a video clip of Donald Trump criticising France's new levy on the revenues of US technology giants:
If you were thinking about buying a Le Creuset dish or a Longchamp bag, you might want to do that sooner rather than later. Here is the full list of proposed U.S. tariffs on French goods: https://t.co/S8b6mTuwPC pic.twitter.com/viYpHQ8PfD
1.44pm GMT
The Paris stock market is also suffering a dose of tariff blues.
The CAC 40 index is down 1%, with consumer companies and factories suffering the biggest losses.
1.23pm GMT
The US stock market is also heading for sharper losses in an hour's time:
US Futures sliding now:
US Opening Calls:#DOW 27577 -0.78%#SPX 3094 -0.66%#NASDAQ 8243 -0.87%#RUSSELL 1600 -0.53%#FANG 2815 -1.34%#IGOpeningCall
1.08pm GMT
Just in: Britain's FTSE 100 index of top shares has hit its lowest level since late October.
The Footsie has now lost 108 points to 7,177, its weakest level in six weeks.
12.52pm GMT
Data firm Panjiva has calculated that America's new proposed tariffs cover 4.1% of all French exports to the US, worth just over $2.4bn.
Cosmetics takes the biggest hit, followed by sparkling wine.
The largest import lines were: beauty products worth $842 million; champagne where imports were worth $806 million; handbags worth $434 million and; dairy products worth $202 million.
12.33pm GMT
While shares slide, the pound is rising towards its highest level in six months.
Sterling has just hit $1.30 for the first time in six weeks, and is close to levels not seen since May.
Cable near to highest since May - few pips only away pic.twitter.com/huwVJ6jk58
@ICMResearch's penultimate VI poll of the campaign, first published by @ReutersUK, shows the Conservatives maintaining their 7-pt lead over Labour. The Conservatives are on 42% (+1), while Labour are on 35% (+1) https://t.co/0nXrFlaCdS pic.twitter.com/skui42cYo2
12.17pm GMT
Agathe Demarais, Global Forecasting Director at The Economist Intelligence Unit, suspects that Donald Trump won't actually impose those new tariffs on French champagne, cheese, handbags and cosmetics.
Why? Because it would drive up prices in the shops - not a good idea in an election year.
The fact that the proposed US tariffs would target consumer goods will restrain Mr Trump from moving forward with these actions. Targeting French consumer goods, such as champagne and luxury items, would make these tariffs personal for US consumers; this is something that Mr Trump will want to avoid before the US 2020 presidential election as it could hurt his re-election chances.
France has vowed to retaliate at the European level against the US proposed tariffs. Overall, this new row illustrates the ongoing deterioration of the relationship between the US and its traditional European allies, and France in particular.
11.44am GMT
ITV's Joel Hills points out that the UK could soon have its own digital services tax -- it's in the Conservative manifesto!
Boris Johnson is planning a Digital Services Tax that is identical in name and very similar in design to the French tax that has enraged President Trump. The US is imposing penalty tariffs on French goods. Will this become an issue in trade talks if Boris Johnson becomes PM? pic.twitter.com/8GcmdB8rKX
11.33am GMT
This tweet shows the moment when Trump's comments on China hit the wires, and rattled the Wall Street futures market:
Stocks drop on Trump China trade comments https://t.co/ALTElcnvG3 pic.twitter.com/fWUewBfrLb
11.16am GMT
Investors are very disappointed by the prospect of waiting another year for a US-China trade deal, says Neil Wilson of Markets.com.
Markets simply aren't priced for this; for a trade deal to be that far in the future - if one can even be struck at all. After weeks of making generally positive noises on a deal being very close, there is a real sense now that a deal is not so very near at all and markets need to reprice. Combined with the barrage of tariff threats on the EU, the comments can be taken as a sign that the White House has no qualms about levying further tariffs and is happy about using trade as a economic, political and diplomatic weapon.
Of course, Donald Trump's shoot-from-the-hip comments in these kind of interviews need to be taken with a dose of salt - we could just as easily see him row back on this later, as has happened countless times already. We're only ever a tweet away from saying that a deal is very close to see a rebound. However, it's clear that hopes for even a skinny deal being done this year have diminished in the last two days and markets are reflecting this.
11.15am GMT
The FTSE 250 index, which contains medium-size companies, has shed 0.8% today.
That's a fall of 167 points today, to 20,531 - its lowest level in over a week.
10.55am GMT
Investors are now worrying that America might impose another swathe of tariffs on China in two weeks time.
President Trump has previously threatened to impose 15% levies on $160 billion of Chinese imports on December 15, if a trade deal hadn't been reached by then.
"If tariffs scheduled for Dec. 15 are implemented it would be a huge shock to the market consensus," said Sue Trinh, managing director for global macro strategy at Manulife Investment Management in Hong Kong.
"Trump would be the Grinch that stole Christmas," she said.
Here's what happens to markets if fresh U.S. tariffs on China kick in on Dec. 15 https://t.co/7nQVwgmRti
10.31am GMT
The US stock market is now expected to open lower, following Donald Trump's un-urgent comments about China.
The Dow is tipped to drop by around 0.3%, according to the futures market.
Relatively muted reaction so far given implications of Trump comments on trade deal:#DOW 27699 -0.35%#SPX 3104 -0.35%#NASDAQ 8274 -0.49%#RUSSELL 1605 -0.25%#FANG 2839 -0.50% pic.twitter.com/5Vhm6svK1p
Distinct lack of urgency from Trump vis-a-vis US, China trade deal, suggests tariffs could well kick in on December 15th.
About that phase one trade deal?
10.24am GMT
Donald Trump has alarmed investors by declaring that he's really in no rush to reach a trade deal with China.
In London, the FTSE 100 has slumped by 81 points or over 1% to 7,203 points, its lowest level in almost two weeks.
BREAKING: No deadline on China deal!
"I have no deadline on #China deal and it might be better to wait until after November 2020 election" #TrumpinUK
10.13am GMT
Boom! Donald Trump has suggested that a trade deal with China could be a year away.
Asked if it could be agreed by the end of 2019, he replies that any deal is dependent on one thing - whether he wants to do it.
In some ways I think it's better to wait until after the election for the China deal. But they want to make a deal now.
10.00am GMT
Trump also said he is doing "very well" with trade talks with China, even though a Phase One trade deal hasn't been reached yet.
9.46am GMT
Just in: Donald Trump has launched a scathing attack on France's digital tax, and its president Emmanuel Macron.
I'm not going to let anyone take advantage of American companies.
If anyone is going to take advantage of American companies, it's going to be us.....
9.22am GMT
The list of French products that could incur a 100% tariff runs to 63 entries, covering food, drink, fashion, cosmetics and accessories.
8.58am GMT
You can read America's ruling against France here.
In it, the US Trade Representative explains that the digital tax is unfair because it discriminates against U.S. digital companies, such as Google, Apple, Facebook, and Amazon.
In addition, the French DST is inconsistent with prevailing tax principles on account of its retroactivity, its application to revenue rather than income, its extraterritorial application, and its purpose of penalizing particular U.S. technology companies
"Indeed, USTR is exploring whether to open Section 301 investigations into the digital services taxes of Austria, Italy, and Turkey.
The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets U.S. companies, whether through digital services taxes or other efforts that target leading U.S. digital services companies."
8.38am GMT
Shares in French luxury goods makers are dropping, due to the threat of higher tariffs on their goods.
LVMH, which produces Moit & Chandon (yummy!) have fallen 1.5% on the Paris stock market.
8.19am GMT
Critics of trade wars point out that tariffs are effectively a tax on consumers, as they make imports more expensive.
8.10am GMT
Britain's FTSE 100 index has opened lower, as trade war jitters ripple through the City.
Mining companies are among the top fallers, with Anglo American losing almost 2%. A trade war can mean lower demand for commodities such as iron ore and coal.
7.56am GMT
Paris is also refusing to abandon its new digital tax plan, despite America's threats.
Junior economy minister Agnes Pannier-Runacher has declared that France will be "pugnacious" over the issue.
"It is very clear that we do not need to go back on this, with regards to a topic that economically speaking makes sense.
We need to be pugnacious on the subject.
7.48am GMT
The French government is furieux about America's threat to impose a 100% tariff on some of its most cherished exports.
Finance minister Brune Le Maire has told Radio Classique that the move is "unacceptable", and not what you'd expect from an ally.
"In case of new American sanctions, the European Union would be ready to riposte"
7.37am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
"sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies."
Related: US threatens tariffs on French cheese, handbags and lipstick
Related: Trump to restore steel tariffs on Brazil and Argentina
The US placing steel and aluminium tariffs on Argentina and Brazil caught markets off guard. Traders have had US-China trade tunnel vision. As Americans would say, this came out of left field.
The new tariffs in South America are a reminder that with Trump as US President, a phase one trade deal with China doesn't mean global trade just resets to the old status quo.
*FRANCE'S LE MAIRE SAYS U.S. TARIFFS PLAN 'IS UNACCEPTABLE'
*FRANCE'S LE MAIRE SAYS EU WILL BE READY TO RETALIATE
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