Wall Street fell into a sea of red yesterday with the Dow Jones ending last night’s trading session 473.39 points down, a fall of 1.79 percent to 25,965.09. The S&P 500 lost 48.42 points, or 1.7 percent, to 2,884.05, while the Nasdaq Composite dropped 159.53 points, or 1.96 percent, to 7,963.76. The S&P ended above its session low but registered its third biggest daily percentage drop of 2019. Tensions are rising globally over fears the US and China are floundering, rather than reaching an agreement, in their long-running trade dispute.
It comes after US President Donald Trump last weekened threatened to raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent by the end of the week.
US Trade Representative Robert Lighthizer on Monday vowed to continue talks but said that as of now “come Friday there will be tariffs in place”.
Asian shares opened in the red today off the back of the threats as panicked investors sold off stock.
At 9.12am UK time, the Shanghai Composite index was down 1.1 percent to 2,893.76, while the blue-chip CSI300 index lost 1.4 percent.
The smaller Shenzhen index shed 0.7 percent and the start-up board ChiNext Composite index fell 1.5 percent.
In Japan, the Nikkei 225 was down 1.46 percent to 21,602.59.
Chris Zaccarelli, Chief Investment Officer at Independent Advisor Alliance, said: “People are starting to price in the fact that trade negotiations may fall apart or at least extend.
“There are people who tried to buy the dip but at the end of the day there’s more people raising cash because they’re worried.”
In Europe, the S&P Europe 500 index had lost 1.41 percent at the time of writing to 1,543.84.
The FTSE 100 was trading up by 0.02 percent, taking it to 7,261.65.
The threat of higher tariffs from President Trump came as US authorities accused China of backtracking on commitments made to end their bitter trade war.
Treasury Secretary Steven Mnuchin declined to give specifics but said the US side had originally hoped to conclude a deal either way this week.
China has repeatedly said it will make changes to open its economy on its own timeline, not in response to trade disputes.
Beijing has recently adopted new laws, including a Foreign Investment Law, and amended others, in moves some see as efforts to tackle concerns of the US and other foreign investors.
It was confirmed yesterday that Chinese Vice Premier Liu He will still visit the US this week for trade talks, despite the recent accusations from the US officials.
China’s Commerce Ministry confirmed that Liu, who leads the talks for Beijing, will visit the US on Thursday and Friday.
It is not clear what topics will be discussed during the trip.