Global stocks drop on fears of expanding trade war

Global stocks drop on fears of expanding trade war
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NEW YORK (Reuters) – Global equities tumbled and safe-haven sovereign bonds surged Friday after U.S. President Donald Trump’s unexpected threat of tariffs on Mexican goods added to fears that escalating trade wars will push the U.S. and other major economies into recession. The yield on Germany’s 10-year government bond – regarded as one of the safest assets in the world – fell to a record low while U.S. Treasury yields slipped to 20-month lows. Washington says it will impose a 5% tariff beginning June 10, which would then rise steadily to 25% until illegal immigration across the southern border is stopped. Trump tweeted the decision late Thursday, catching markets by surprise. “Very clearly when we all thought that the main trade tensions in the world were between the U.S. and China or perhaps between the U.S. and Europe, we hadn’t realized there will be another trade tension with Mexico … and it raises concerns about who the next country may be,” said Andrew Milligan, head of global strategy at Aberdeen Standard Investments. A key measure of Chinese manufacturing activity for May also came in below expectations, raising questions about the effectiveness of Beijing’s stimulus steps and the health of the global economy. “It is a nasty slowdown, it looks likely to be taking longer than we thought. Many thought that the slow down would be in Q1 and the recovery in Q2, but clearly everything that we see in May is telling us this will be pushed back into […]

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