Chinese stocks fell almost 4 percent and alarm bells rang across global markets on Tuesday, as the trade dispute between the United States and China escalated further.
The yuan also hit a five-month low overnight after U.S. President Donald 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 U.S. goods.
Asian stocks wilted to a four-month low and Australia’s dollar AUD=D4 and South Africa’s rand ZAR= were among a diverse group of currencies caught in the crossfire. [FRX/][EMRG/FRX]
Europe’s main equity benchmarks [.EU] sank 1 to 1.5 percent in early trading and Wall Street futures were pointing to similar falls there later, while safe-haven government bonds and the Japanese yen rallied as investors sought protection.
The trade frictions have unnerved financial markets, with investors and businesses increasingly worried that a full-blown trade battle could derail global growth.