Investments 

Trump's tariff talk makes markets twitch

Trump's tariff talk makes markets twitch

The US has less to lose than China or most of the rest of the world from a trade war according to Garret Fish, manager of the £1bn JP Morgan American investment trust, as President Trump sent Asian markets reeling with the promise of tighter tariffs on imports.

Global stock markets are lower this morning (19 June) in the wake of US President Donald Trump telling his advisers to prepare a fresh round of tariffs on Chinese goods if China instigates tariffs on US goods.

The result of this is global equities have fallen sharply, with the Nikkei index of Japanese shares down 1.77 per cent, while the Hang Seng Index of shares listed in Hong Kong is down 2.9 per cent.

The FTSE 100 is down just less than one per cent, while the more domestically focused FTSE 250 is down half a per cent.

Shares of commodity companies have been hardest hit, with miners Anglo American down over 2 per cent and Rio Tinto shares down 2.6 per cent.

This is because China is a major consumer and importer of commodities, and if the economy of that country slows down, demand for commodities will suffer.

In contrast, the oil price has risen as markets anticipate China will stop buying oil from the US and switch to buying from the OPEC countries, which will allow those countries to push up the price, according to Fiona Cincotta, market analyst at City Index.

Mr Fish said “there will be no winners from a trade war, but 70 per cent of US GDP comes from within the domestic economy rather than from exports, which means it should lose out less than any other country would”.

David.Thorpe@ft.com