Trump announced on Thursday he would impose heavy tariffs on imported steel and aluminium to protect USA producers, risking retaliation from major trade partners such as China, Europe and Canada.
Shares of US steelmakers jumped but industrial heavyweights like Boeing and Caterpillar fell as investors anxious about higher raw material costs and trade barriers elsewhere.
The Canadian dollar CAD= hit session lows versus the USA currency following Trump's tariff announcement. The company also said its chief financial officer will depart.
"It remains to be seen whether not there's a response from the foreign government".
"The market understands it", he said.
TESTIMONY MOVING MARKETS. The chart on the left shows the S&P 500 (SPX) during Powell's testimony, compared to the Cboe Volatility Index (VIX), charted as the purple line. "Then of course when he announced tariffs you saw the market pull back".
"It's reasonable for markets to start repricing a possibility of higher inflation and higher interest rates", Sturkenboom said.
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The S&P 500 registered a third straight day of more than 1 percent declines.
Gold prices dipped on Thursday, pulled down as the dollar remained strong following comments from Federal Reserve Chairman Jerome Powell that fanned concerns of faster-than-expected hikes in United States interest rates.
The Dow Jones industrial average dropped as much as 500 points Thursday.
"We just need to take a deep breath", said Omair Sharif, senior USA economist at Societe Generale in NY.
The Standard & Poor's 500 index fell 3 points, or 0.1 percent, to 2,710. "It would raise the price of autos, look at the auto stocks". Utilities fell 1.7 percent.
In Asia, Japan's Nikkei 225 tumbled 1.4 percent, South Korea's Kospi lost 1.2 percent and the Hang Seng in Hong Kong lost 1.4 percent.
European markets had already closed by the time Trump's comments about tariffs was reported.
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In Europe, stock indexes were mixed with France's CAC 40 close to flat and Germany's DAX down 0.3 percent. China's Shanghai Composite index rose 14.35 points or 0.44 percent to 3,273.76.
Bilal Hafeez, a macro strategist at Nomura in London, said the extent of the dollar reaction to the tariffs will likely depend on the reaction of other countries to the move.The euro, meanwhile, was up 0.5 percent versus the dollar, with the focus on Sunday's Italian parliamentary election and the level of support for populist agendas that could have a wider impact on the European Union. Disney lost $4.94, or 4.5 percent, to $104.87.
Yesterday, Powell delivered his semiannual monetary policy report before the House, which was interpreted by some analysts as a bit more hawkish than former Fed Chair Janet Yellen.
USA benchmark 10-year Treasury notes last rose 15/32 in price to push yields lower to 2.8114 percent but are still near four year highs. February snapped a 10-month winning streak for the Dow. At the December meeting, the central bank projected that it would raise rates another three times this year.
Crude oil fell more than 1.0 percent, hitting two-week lows on pressure from a strong US dollar and worries that surging USA crude output might thwart efforts by the Organization of the Petroleum Exporting Countries to drain global supply.
COMMODITIES: Benchmark U.S. crude fell $1.22 to $61.79 while Brent crude, the worldwide standard, dropped $1.19 to $65.33 per barrel.
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