The markets across the globe are under pressure. Investors are petrified about escalating tensions between US and China as US President Donald Trump, in his drive to keep America first, has put in import tariffs on China, triggering trade war. Experts believe other countries may soon enter into trade war as they wouldn't want to lose out to competition.

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Indian stock market extended losses for the second straight day. The Sensex ended at 35,286, down 261.52 points, while the broader Nifty shed 89.40 points to 10,710. 
 
Rating agency Moody's believes China may take strong retaliatory steps against America's tariff move, which may result into currency war type of a situation involving other countries. 
 
Impact on Chinese markets

Trump’s threat to impose a 10 percent tariff on another $200 billion of Chinese goods drew warnings from Beijing about $50 billion of retaliatory penalties on US goods. The move came after Beijing decided to raise tariffs on $50 billion in US goods, which was in retaliation for US tariffs announced on Friday.
 
The Shanghai Composite Index slumped nearly 5 per cent at one point to its lowest level since mid-2016, while Hong Kong's Hang Seng shed as much 3 per cent before ending 2.8 per cent down.

Other Asian markets
 
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.9 per cent to its lowest since early December. The losses had intensified through the day as the rout deepened in China. Japan's Nikkei lost 1.8 per cent, South Korea's KOSPI retreated 1.3 per cent while Australian stocks bucked the trend and added 0.1 per cent, helped by a depreciating currency and an overnight bounce in commodity prices.

Why US futures are falling 

China has warned US that it will take “qualitative” and “quantitative” measures if the US government publishes an additional list of tariffs on its products. These statements triggered sell-off in Dollar index and US futures. Meanwhile, a fall in oil prices ahead of OPEC meeting on Friday also contributed to the losses. 

Why European markets are trading in red

The escalating protectionist tit-for-tat between the US and China extended a selloff in European shares too. Autos, mining and technology stocks were in the eye of the storm. America has already impose duties on auto imports from European Union. 

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Europe’s main equity benchmarks sank 1 to 1.7 per cent. The pan-European STOXX 600 fell 1.2 per cent to its lowest since April 26, while euro zone stocks tumbled 1.4 per cent. Germany's DAX, home to some of the world's biggest carmakers which Trump has explicitly targeted in his tariffs rhetoric, suffered the worst fall, down 1.7 per cent.

Meanwhile, European Central Bank monetary policy due later today also kept the investors unnerved. The ECB President Mario Draghi has already expressed concerns over growth and inflation front. Draghi is expected to deliver public remarks in Portugal later today.