Global stocks sink after Trump threatens more China tariffs

Global stocks sank Wednesday after President Donald Trump threatened more tariff hikes on Chinese imports if talks aimed at ending a trade war fail to produce an interim agreement. Market benchmarks in London, Frankfurt, Shanghai, and Tokyo declined.

Trump said Tuesday that an agreement on the "Phase 1" deal announced last month "could happen soon." But he warned he was ready to raise tariffs "very substantially" if that fails. The two sides disagree publicly about whether Washington agreed to roll back some punitive tariffs imposed in the fight over Beijing's trade surplus and technology ambitions. The Chinese government said last week that was settled, but Trump denied that.

Trump's comments "served as a reminder of the challenge that the two sides face," said Jingyi Pan of IG in a report. However, she said, investors saw them as "positioning statements," reducing their impact. Wall Street closed Tuesday with modest gains.

In early trading, London's FTSE 100 declined 0.4 percent to 7,338.51 and Frankfurt's DAX lost 0.5 percent to 13,222.13. France's CAC 40 shed 0.5 percent to 5,888.55. Wall Street, futures for the benchmark Standard & Poor's 500 index and the Dow Jones Industrial Average were down 0.3 percent. In Asia, the Shanghai Composite Index lost 0.3 percent to 2,905.24 and Tokyo's Nikkei 225 sank 0.9 percent to 23,319.87. Hong Kong's Hang Seng tumbled 1.8 percent to 26,571.46.

South Korea's Kospi retreated 0.9 percent to 2,122.45 and Australia's S&P-ASX 200 sank 0.8 percent at 6,698.40. India's Sensex lost 0.3 per cent to 40,215.20. Taiwan, New Zealand, and Singapore declined. Hong Kong shares, already under pressure from the US-China tariff war and slowing global demand, have been jolted by growing violence in anti-government protests.

The protests began in June over a proposed extradition law and expanded to include demands for greater democracy and other grievances. Hong Kong tumbled into its first recession in a decade in the latest quarter. On Tuesday, the S&P 500 ended up 0.2 percent while the Dow was unchanged. The Nasdaq gained 0.3 percent to a record.

Momentum for the market has been mostly upward for more than five weeks as worries about the US-China trade war have eased. Health care, technology and communication services stocks led gains Tuesday, outweighing losses in energy companies and elsewhere.

This week, the US Labor Department is due to give updates on consumer and wholesale inflation. Economists expect a government report to show retail sales returned to growth in October. Federal Reserve Chairman Jerome Powell is due to give testimony to Congress on Wednesday about the US economy. Most investors expect the Fed to keep interest rates on hold for now after cutting them three times since the summer.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)