Stock markets fell on Friday as a closely-watched US inflation reading heated up, adding to concerns over the fallout from an incoming wave of tariffs by President Donald Trump.
Shares in automakers fell further as they brace for 25-percent levies due to kick in early next week along with a raft of “reciprocal” tariffs tailored to different countries.
The market mood has soured over fears that Trump’s tactics will trigger tit-for-tat tariffs that would rekindle inflation, which could put the brakes on interest rate cuts and spark a recession.
“Investors remain nervous over the economic repercussions from President Trump’s tariff threats, just days before he unleashes his ‘reciprocal tariffs’ (on April 2),” said David Morrison, senior market analyst at financial services provider Trade Nation.
Wall Street opened in the red after official data showed the Federal Reserve’s preferred inflation measure, the personal consumption expenditures (PCE) price index, remained unchanged last month at 2.5 percent.
But another key figure, core inflation, which strips out volatile food and energy costs, rose more than expected at 2.8 percent in February on an annual basis, up from 2.6 percent the month before.
A tit-for-tat trade war and a reignition of inflation could force the Fed and other central banks to rethink plans to cut interest rates.
“The (PCE) report isn’t devastating, but given the current economic uncertainty and market volatility, investors were looking for reassurance in this report — not something to fan the flames,” said Bret Kenwell, US investment analyst at eToro trading platform.
In Spain, data showed inflation eased to 2.3 percent in March as rainy weather boosted hydro power production and drove down electricity prices. Consumer price rises remained unchanged in France at 0.8 percent.
Paris and Frankfurt stocks dropped, with automakers Volkswagen, Renault, and Stellantis, whose brands include Jeep, Peugeot, and Fiat, faring particularly badly.
General Motors and Ford had more limited losses on Wall Street.
London bucked the trend, with the FTSE 100 index rising as data showed that the UK economy expanded more than initially estimated last year and retail sales rose.
Tokyo’s stock market sank 1.8 percent as the world’s biggest carmaker, Toyota, fell, along with Honda, Nissan, and Mazda.
Seoul was off 1.9 percent as Hyundai gave up 2.6 percent.
Uncertainty over Trump’s plans and long-term intentions has led investors to rush into safe havens such as gold, which hit a new record high of $3,085.96 an ounce on Friday.
Governments around the world have hit out at Trump’s latest tariffs, with Canadian Prime Minister Mark Carney saying the “old relationship” of deep economic, security, and military ties with Washington is over.
Tariff worries also saw Hong Kong and Shanghai stock markets fall.
Bangkok was in the red when trading was suspended as the Thai capital was shaken by a powerful earthquake in neighbouring Myanmar.
Investors also kept tabs on Beijing, where Chinese leader Xi Jinping met leading business leaders pledging the country’s door would “open wider and wider”.
He also warned the world trading system was facing “severe challenges”.
– Key figures around 1340 GMT –
New York – Dow: DOWN 0.2 percent at 42,216,50 points
New York – S&P 500: DOWN 0.2 percent at 5,683.38
New York – Nasdaq: DOWN 0.4 percent at 17,741.10
London – FTSE 100: UP 0.1 percent at 8,673.30
Paris – CAC 40: DOWN 0.5 percent at 7,949.83
Frankfurt – DAX: DOWN 0.4 percent at 22,593.76
Tokyo – Nikkei 225: DOWN 1.8 percent at 37,120.33 (close)
Hong Kong – Hang Seng Index: DOWN 0.7 percent at 23,426.60 (close)
Shanghai – Composite: DOWN 0.7 percent at 3,351.31 (close)
Euro/dollar: UP at $1.0803 from $1.0796 on Thursday
Pound/dollar: UP at $1.2957 from $1.2947
Dollar/yen: DOWN at 150.62 yen from 151.04 yen
Euro/pound: UP at 83.40 pence from 83.38 pence
West Texas Intermediate: DOWN 0.3 percent at $69.73 per barrel
Brent North Sea Crude: DOWN 0.4 percent at $73.04 per barrel
AFP
