Global stocks fell as metal prices sunk to their lowest in a year on Wednesday, all while the U.S. unveils new tariffs of 10% on USD 200 Billion worth of Chinese goods, pushing the world’s two biggest economies ever closer to a full-scale trade war.
The United States had just levied tariffs on USD 34 Billion worth of Chinese goods last Friday, drawing retaliation from Beijing on U.S. imports. President Donald Trump then warned that he may impose tariffs on more than USD 500 Billion worth of Chinese goods, around the total amount of U.S. imports from China last year.
Shanghai’s markets were hit the hardest, with their stocks down almost 2% at closing.
Hong Kong’s Hang Seng lost over 1%, as well as Japan’s Nikkei as the yen received something of a safety bid.
According to Reuters, the Australian dollar, often seen as an alternative for China’s economic prosperities due to raw materials it sells there, fell 0.9%. South Korea’s won and Taiwan’s dollar dropped around 0.7% while Mexico’s peso lost 0.5%.
However, it was industrial metals prices that took the heaviest hits over worries that this dispute could dent China’s commodity-hungry economy. Copper, lead, and zinc all sunk 4% to their lowest levels in about a year. Copper was down at 3% at USD 6180.50.
Oil prices were also hit by the trade war concerns. Brent fell over USD 2.0 a barrel. It went as low as USD 76.80 before recovering to USD 76.86. U.S. light crude was down a more modest USD 75 cents at USD 73.36 a barrel.
Analysts believe a positive outcome is still likely, but it will rely heavily on both sides coming to an agreement over the U.S. complaint about China’s intellectual property practices.