AFP- Global stocks tumbled Friday, with investors fleeing equities for safe-haven assets following the latest salvos on international trade.
With US President Donald Trump announcing new tariffs on all Mexican imports and China warning it would create a list of "unreliable" foreign companies, investors piled into low-risk assets, sending the yield on 10-year German government bonds to a record low.
German Bunds hit minus 0.213 percent in the secondary market, breaking the previous record of minus 0.205 percent set in July 2016, while the 10-year US Treasury note fell further, stoking additional investor angst.
The yen, another safe-haven investment, shot higher, pressuring Tokyo’s main stocks index, which plunged 1.6 percent.
As trade tensions escalated, US indices shed more than one percent in a bitter conclusion to a bruising May, the first month of 2019 with losses.
European stocks also ended solidly lower, while oil prices fell hard.
Trump’s latest tariff move amounted to "another log on the fire of global risk aversion," analyst Joseph Manimbo of Western Union Business Solutions said in a client note.
"The news heightened fears of aggressive trade policy slowing growth in the US and globally, sending stocks and oil markets swooning, and investors ducking for cover in safer currencies like the yen, Swiss franc and greenback."
– Auto shares dented –
Trump’s announcement late Thursday of a five percent tariff on all goods from Mexico starting June 10, which will quickly ramp up to 25 percent, was aimed at forcing the country to stem a flow of migrants from Central America crossing the southern US border.
Trump had only recently kick-started the process of ratifying a new North American trade pact by removing all tariffs on aluminum and steel, but he has now put the accord at risk, according to experts and key US lawmakers.
Carmakers were among the hardest hit by Trump’s announcement, with shares in Mazda plummeting 7.1 percent, Nissan tumbling 5.3 percent, Renault shedding 4.3 percent and Volkswagen losing 2.8 percent.
General Motors slumped 4.3 percent and Fiat Chrysler sank 5.8 percent, while auto suppliers such as Delphi and Lear were also battered by the announcement.
Trump’s action comes amid a protracted trade war between the United States and China.
The tariff hike on $200 billion in Chinese goods earlier this month "may already be undermining foreign demand," analyst Julian Evans-Pritchard of consultancy Capital Economics wrote in a research note.
China is retaliating by raising tariffs on $60 billion worth of US goods on Saturday, while official data Friday showed the Asian economic giant’s manufacturing activity contracted more than expected in May.
Beijing also announced Friday that it would release a list of "unreliable" foreign companies and individuals, striking back after the United States targeted telecom giant Huawei in their escalating trade war.
– Key figures around 2050 GMT –
New York – Dow: DOWN 1.4 percent at 24,815.04 (close)
New York – S&P 500: DOWN 1.3 percent at 2,752.06 (close)
New York – Nasdaq: DOWN 1.5 percent at 7,453.15 (close)
London – FTSE 100: DOWN 0.8 percent at 7,161.71 (close)
Frankfurt – DAX 30: DOWN 1.5 percent at 11,726.84 (close)
Paris – CAC 40: DOWN 0.8 percent at 5,207.63 (close)
EURO STOXX 50: DOWN 1.1 percent at 3,280.43 (close)
Tokyo – Nikkei 225: DOWN 1.6 percent at 20,601.19 (close)
Hong Kong – Hang Seng: DOWN 0.8 percent at 26,901.09 (close)
Shanghai – Composite: DOWN 0.2 percent at 2,898.70 (close)
Euro/dollar: UP at $1.1167 from $1.1129 at 2100 GMT
Pound/dollar: UP at $1.2629 from $1.2608
Dollar/yen: DOWN at 108.35 yen from 109.62 yen
Oil – Brent Crude: DOWN $2.38 at $64.49 per barrel
Oil – West Texas Intermediate: DOWN $3.09 at $53.50 per barrel