Trump’s spat with France puts markets in a spin
President Trump’s impromptu comments at a London press conference dented confidence
The prospect of the US engaging in a trade war with China and punishing France with luxury goods tariffs, coupled with fears that the UK too might become embroiled in the spat, have put markets in a spin.
The trade deal between China and the US, which traders thought was close to being finalised, was cast into doubt yesterday when Mr Trump suggested that agreement might not be reached until next November.
Then today, in an impromptu comment to reporters in London, the President said Europe wasn’t trading fairly with the US.
Markets across the globe had already reacted badly to comments from Mr Trump which they had interpreted as meaning that the tariffs on Chinese goods, which were due to start on December 15 unless a deal is struck, will now not get waived.
Mr Trump’s brinkmanship was seen as a threat to the optimism which markets had been enjoying.
His comments about trade with Europe further dented confidence. The 0'>Dow fell almost 1 per cent in early trading, before recovering slightly to a loss of 268 points to 27,873 by mid-morning US time. The index had dipped to a one-month low in early trade, with traders seeing all November’s gains scaled back.
The 0'>S&P 500 was down 27 points at 3,113.87. The VIX Volatility Index opened strongly and was 15 per cent up, at 17.23 in early US trade.
Mr Trump, who is in London for the Nato summit, also had a tetchy meeting with French President Emmanuel Macron. At a press conference later, he described the French leader’s comments about the Nato alliance, which Macron had called “brain dead” in comments made in November 2019, as “very disrespectful”, and poured scorn on France’s economic record. The Paris stock market, the 0'>CAC 40 index, was down 57.24 points at 5728.24.
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The US is planning to impose tariffs on French luxury goods in retaliation for a digital tax which France is imposing on US tech giants. As the UK is contemplating a similar levy, the markets were spooked by the prospect of the US taking steps to punish the UK in an equivalent way.
In the UK, the 0'>FTSE fell 1.62 per cent, losing 118 points to close at 7,167.81. Luxury goods companies such as 0'>LVMH , mining stocks and holiday companies took the pain.
Markets were jittery as they priced in a failure of US-China talks, and the FTSE 250 index, fell 183 points, closing down at 20,516.
At time of writing, 0'>Bitcoin was at 7,323.45 while 0'>Gold rose 0.43 per cent to 1,475.50, an increase of 6.30 points. In the commodities market, 0'>Crude oil was steady at 56.10, a rise of 0.25 per cent.
0'>Sterling, however, rose towards its highest level in six months. It reached $1.30 for the first time in six weeks, and is close to levels not seen since May 2019, buoyed by opinion polls that suggest Boris Johnson will win a majority in the General Election next Thursday.
Meanwhile, Labour leader Jeremy Corbyn said that the NHS would never be for sale to US interests under a Labour government. Against the euro, sterling was up 0.41 per cent at 1.173.