Published: Sat, March 03, 2018
Money | By Hannah Jacobs

Stocks Plunge After Donald Trump Promises Steep Tariffs on Foreign Metals

Stocks Plunge After Donald Trump Promises Steep Tariffs on Foreign Metals

The decision comes just weeks after the U.S. Commerce Department indicated that tariffs against foreign producers were necessary to safeguard the country's national security interests.

On the day, General Motors Co (GM.N) shares lost 4 percent, while Ford Motor Co (F.N) was down 3.0 percent.

In addition, reports covering US auto sales for February are scheduled to roll in throughout the day.

US President Donald Trump tweeted on Thursday that the US steel and aluminum industries need "free, fair and smart trade".

"It's helping about a dozen stocks in those industries but has raised the specter of trade wars, and trade wars don't help the stock market", Tuz said.

The tariff news overshadowed the Senate testimony of Federal Reserve Chairman Jerome Powell and comments from New York Fed President William Dudley on interest rates.

Powell said the Fed expects to continue to hiking rates gradually as it looks to keep economic growth in check while not thwarting the recovery.

But Powell said that the government's fiscal policy was now "more stimulative", which would help to boost inflation, which has been chronically low in recent years. "Four (rate hikes) this year is now the consensus I think", Tuz said.

"Stock markets are a lot more skittish than they were in the past, because the skew in the monetary policy is on the tightening side", said Wouter Sturkenboom, senior investment strategist at Russell Investments.

Detrick also said that investors were anxious about retaliatory tariffs from China.

Energy stocks were up 1.2 percent, led by a 5 percent gain in Range Resources and a 3 percent rise in Andeavor. The FTSE 100 in London dropped 1.1 percent.

European markets had already closed by the time Trump's comments about tariffs was reported.

About 20 minutes into trading, the Dow Jones Industrial Average was down 0.4 percent to 24,930.23. US stock indexes fell sharply, with the S&P 500 index down more than 1.5 percent in what would be a third consecutive day of losses. The Nasdaq composite was up 10 points, or 0.1 percent, to 7,283.

Bond prices rose. The yield on the 10-year Treasury fell to 2.80 percent.

The US dollar rose to six-week highs against a basket of currencies while the gap between short-dated US and German bond yields was at its widest since 1997. We've seen some data that will, in my case, add some confidence to my view that inflation is moving up to target. Given the markets hyper-sensitivity to interest rate expectations, particularly in light of Powell's optimism over the strength of the U.S. economy, even the slightest surprise to the upside on a reading, could put fresh legs on the dollar rally.

"In the USA we have at least three rate hikes this year, but in the euro zone, there was some exaggeration about where the inflation was heading so that is now being priced out and yields are moving to the downside", said DZ Bank strategist Daniel Lenz.

Oil fell more than 1 percent, hitting two-week lows on pressure from a strong dollar and worries that surging USA crude output might thwart efforts by the Organization of the Petroleum Exporting Countries to drain global supply.

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