Trump Sparks New Round Of Market Volatility

By Glenn Dyer | More Articles by Glenn Dyer

Is Donald Trump starting to lose his cool?

Certainly the last few weeks has seen the question emerge in American business circles but his performance on Friday has dragged it to the forefront.

Up to the Trump tweets on Friday where he escalated the trade war with China and his attacks on Fed chair, Jerome Powell, most sharemarkets were higher, especially in the US.

But the Trump Tweets saw those gains turned into losses.

Because Trump’s comments came late in the session on Friday, the gains for the week were mostly preserved. And there was no impact on Asia which had a good positive day’s trading on Friday.

Eurozone shares up 0.3%, Japanese shares were up 1.4%, Chinese shares were up 3% and Australian shares added 1.8%.

But now the sell-off – commodities will come under more pressure as well – will come today starting in Asia after Wall Street’s 2.3% to 3% slide on Friday night, our time.

Bond yields were mixed over the last week with initial rises that were reversed on Friday as the trade war escalated again.

Oil, metal and iron ore prices fell but the gold price rose. The $A fell despite a rise in the US dollar.

Trump announced that he was increasing tariffs on nearly all Chinese goods on Friday night, escalating trade tensions between Beijing and Washington after markets sold off on fears of the trade war’s impact on the global economy.

In a pair of tweets, Trump said he was raising existing tariffs on $US250 billion of Chinese imports from 25% to 30%, and raising tariffs starting in September on $US300 billion of goods.

As a result, Wall Street saw its 4th consecutive weekly decline after Trump’s trade war escalation on Twitter on Friday. It was an outburst that sent investors scrambling for safe havens and left the benchmark S&P 500 finishing down 2.6%.

At by the end of after-hours trading US S&P 500 futures were showing a 500 point plus fall – pre-opening trading won’t resume until later today as Asian markets resume dealings.

By the close, on Saturday morning Wall Street closed near the day’s lows.The Dow had lost 623.34 points, or 2.37%, to 25,628.9, the S&P 500 shed 75.84 points, or 2.59%, to 2,847.11 and the Nasdaq slid 239.62 points, or 3%, to 7,751.77.

For the week the Dow lost 0.99%, the S&P 500 fell 1.44% and the Nasdaq was off 1.83%. The fall in the S&P 500 last week took the key index back to the lows of August.

At this stage, there’s more weakness ahead for markets this week.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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