Financial markets in Asia and Europe have staged a partial recovery despite China hitting back at a fresh wave of threatened import tariffs by China.
Shares in London opened up as China vowed to “fight to the end” in an escalating tariff war with US president Donald Trump.
The FTSE 100 was up almost 90 points minutes as trading began – a day after the blue chip index suffered another big fall. It came amid a wider calm on the markets globally following a heavy sell-off since late last week which has seen around £7trillion wiped off shares around the world.
The mayhem was sparked by President Trump announcing blanket 10% import tariffs on almost all countries, and considerably more for many. He upped the ante this week by giving China – the world’s second biggest economy – an ultimatum to back down on tariffs on US goods. Beijing responded after Washington hiked levies on its imports to the States. President Trump has warned he will jack up tariffs by another 50%.
China has now hit back, vowing not to bow to “blackmail” from the US. “The US side’s threat to escalate tariffs against China is a mistake on top of a mistake, once again exposing the American side’s blackmailing nature,” China’s commerce ministry said. “If the U.S. insists on having its way, China will fight to the end.”
The EU proposed counter-tariffs of its own to President Trump’s tariff onslaught that swept up dozens of countries, sent financial markets into a tailspin and fuelled expectations that the global economy may be headed for recession.
Stock markets found a firmer footing after a gut-wrenching few days for investors which prompted some business leaders, including those close to the President, to urge the him to reverse course. Japan’s Nikkei index rose 6% on Tuesday, rebounding from a more than one year low hit in the previous session, after Trump and Japanese Prime Minister Shigeru Ishiba agreed to open trade talks.
Chris Beauchamp, chief market analyst at online trading platform IG, said: “It was almost inevitable that risk appetite would recover somewhat after the cataclysmic selling and doom-laden commentary of the past week. Stocks have rallied off their lows as investors seize on comments that indicate negotiations over tariffs are beginning.”“Sentiment remains fragile, and with China pledging to fight ‘to the end’ and the EU announcing fresh tariffs (albeit delayed for now) we are not out of the woods yet.