Global stock markets plunge after China responds in kind to US tariffs

Global equities fell on Monday after Beijing said it would impose new levies on goods from the US in response to tariffs imposed by the Trump administration on Chinese imports last week.

Asian stocks fell broadly, with Nikkei 225 index dropping 0.7 percent and the Shanghai Composite shedding 1.2 percent. Chinese yuan fell to its lowest in more than four months to 6.88RMB to the dollar.

European stocks also took a dive, adding to their earlier losses. The Stoxx 600 index lost 0.5 percent, German DAX slid 0.7 percent, and the French CAC 40 dipped 1.2 percent.

US equities fell sharply at the trade opening, with the S&P 500 Index and Dow Jones Industrial Average both falling more than two percent. Nasdaq 100 futures sank 2.8 percent.

The ongoing trade dispute between the world’s largest economies has intensified lately, adding to investor concerns. Beijing said on Monday it will raise tariffs on $60 billion worth of US products starting June 1. The announcement followed the hike to levies the Trump administration implemented on billions of dollars’ worth of Chinese imports late last week.

On Friday, Washington raised the rate of tariffs on $200 billion worth of Chinese imports to 25 percent, and announced that further tariffs on another $300 billion in imports would be forthcoming. Trump said repeatedly that China “broke the deal” the two sides had been working toward over the past several months.

He tweeted on Monday that China has “taken advantage of the US for so many years, that they are way ahead (Our Presidents did not do the job). Therefore, China should not retaliate-will only get worse!”

Analysts say a further deterioration of trade-deal progress will apply broad downward pressure to equities, while some sectors are especially vulnerable.

Tech investors are also watching trade talks unfold “with white knuckles,” Wedbush analyst Dan Ives was cited as saying by Yahoo Finance.

“With worries that Trump potentially plans to enact additional tariffs on Chinese goods down the road if this trade situation spiral further, tech stocks are ultimately caught in the crossfire, with Apple and the semiconductor space remaining front and center and thus weighing on stocks accordingly this morning,” he added. Apple’s share price fell about four percent in pre-market trading Monday.

White House economic advisor Larry Kudlow said that despite all the tensions Trump and Chinese President Xi Jinping are likely to meet at the June G-20 summit in Japan. The chances of such a meeting “were pretty good,” he said, adding that there are “no concrete, definite plans” for when the US and Chinese negotiators will meet again.

For more stories on economy & finance visit RT's business section