The Australian share market is expected to open sharply lower after US stocks slumped as President Donald Trump’s move to impose tariffs on up to $US60 billion of Chinese imports drove fears about the impact on the global economy.
At 0820 AEDT on Friday, the Australian share price futures index was down 89 points, or 1.5 per cent, at 5,829 points.
The Australian share market on Thursday closed lower after the US central bank lifted interest rates and forecast further hikes in the years ahead.
The benchmark S&P/ASX200 index dropped 0.2 per cent to 5,937.2 points, as gains among energy and materials stocks were offset by weakness in all other sectors.
The Australian dollar has continued to slide against a stronger US currency on Friday morning, appearing to suffer from the US and China trade frictions.
US stocks plunged after the Trump administration slapped sanctions on goods and investment from China.
The Dow Jones industrial average dropped more than 700 points as investors feared that trade tensions between the world’s largest economies would escalate.
The planned sanctions include tariffs on $US48 billion worth of Chinese imports as well as restrictions on Chinese investments.
Trump said he’s taking those steps in response to theft of American technology, and the Chinese government said it will defend itself.
Investors are worried that trade tensions would hurt US companies and harm the world economy.
On Thursday they fled stocks and bought bonds, which sent bond prices higher and yields lower.
Gold futures climbed to settle at their highest in more than two weeks, as the precious metal tracked a dollar hemmed in by signs the Federal Reserve would adhere to a more-conservative script with interest-rate policy this year.
IRON ORE: $66.91 +0.58 (April contract)
Oil prices had their worst day in two weeks, retreating from a seven-week high as the White House announced new tariffs aimed at China, raising fears that curtailed trade could crimp global economic growth.
The dollar rose intraday against the currencies of China, South Korea, and other U.S. trading partners intraday, as concerns over a brewing global trade war intensified.
The dollar was recently up 1.4% against the Korean won and gained 0.5% against China’s offshore yuan. It was up 0.5% against the Mexican peso, and rose 0.7% against the Chilean peso.
President Donald Trump said the U.S. is planning to levy tariffs on about $60 billion of imports from China, as well as impose restrictions on technology transfers and acquisitions by Beijing to pressure China to curtail what the U.S. considers unfair trading and investment practices.
The UK’s top share index fell below a key level on Thursday, hit by concerns over potential trade wars and following a hawkish surprise from the Bank of England’s policy meeting.
The BoE kept interest rates on hold but two policymakers unexpectedly voted for a hike, cementing expectations that borrowing costs will rise in May.
“This meeting can certainly be interpreted as a step towards a hike in May,” Fiona Cincotta, Senior Market Analyst at City Index.
“The FTSE fell steadily on the back of the stronger pound.”
The FTSE 100 fell below 7,000-point as the outcome of the BoE meeting briefly lifted the pound further.
The index ended down 1.2 per cent at 6,952.59 points to a 15-month low.
Hong Kong stocks extended losses to end lower on Thursday, hurt by a slump in shares of IT companies, amid rising trade war fears and as investors digested the impact of a rate hike by the US Federal Reserve.
At close of trade, the Hang Seng index was down 1.1 per cent at 31,071.05, while the Hang Seng China Enterprises index fell 0.8 per cent to 12,427.55.
“Most Chinese corporates seem to be quite resilient against a potential trade war given the high share of domestic revenue,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis.
“However, there are certain sectors which will be relatively more affected, such as information technology and consumer durables.”
Tencent closed down five per cent on Thursday after the Chinese internet giant missed quarterly revenue estimates and warned that planned investments may hurt margins.
The Nikkei 225 in Japan index gained one per cent and the South Korean Kospi added 0.4 per cent.
The S&P/NZX 50 index on Thursday fell 7.48 points, or 0.09 per cent,