Dollar and European stocks fall as Trump hits China with tariffs

Dollar and European stocks fall as Trump hits China with tariffs, photo: Bay Ismoyo | AFP

The greenback's weakness gave the euro some breathing space after a slump in the currency sparked by the European Central Bank's promise that interest rates will remain low for at least another year.

Trump on Friday announced tariffs of 25 per cent targeting US$50 billion (€43 billion) in Chinese imports from "industrially significant" technologies, making good on a pledge to punish the alleged theft of American intellectual property.

China swiftly retaliated by imposing "equal" tariffs on US products.

The trade moves triggered profit-taking in European stock markets, a day after they benefited handsomely from the ECB's accommodating policy stance.

Wall Street was also lower approaching midday in New York.

BACK TO TRADE

"The focus shifts from central banks back to trade," observed Craig Erlam, senior market analyst at the Oanda trading group.

The EU had on Thursday approved a raft of tariffs targeting US goods.

The euro's partial recovery came a day after it was hammered by the ECB's rate announcement that was accompanied by a cut in the central bank's eurozone growth outlook, citing rising protectionism and global trade fears.

The Federal Reserve had on Wednesday said that it would likely hike US rates twice more this year and four times in 2019, highlighting an increasing divergence between the two central banks.

Bank of Japan head Haruhiko Kuroda meanwhile on Friday defended his bank's decision to press ahead with the country's ultra-loose monetary policy.

ROLLS ON A ROLL

After a two-day meeting, the BoJ said it would retain its current framework, pointing to a disappointing lack of progress towards its longstanding 2.0 per cent inflation target.

In London on Friday, shares in British engines maker Rolls-Royce soared nearly 10 per cent.

Fresh from announcing 4,600 job cuts, Rolls said it was now "well placed" to beat its cash flow target of £1.0 billion (US$1.3 billion) by 2020.

Shares in supermarket Tesco, Britain's biggest retailer, meanwhile jumped around 2.5 per cent after the company reported solid first-quarter sales.

Oil prices, meanwhile, fell sharply a week before a crunch meeting of OPEC and its allies who are to decide whether to extend a production cut agreement that has been in force since the end of 2016.

The chances are that Saudi Arabia and Russia will push for agreement to lift output ceilings to offset production shortfalls in Venezuela and Iran.

Key figures around 1545 GMT:

London - FTSE 100: DOWN 1.7 per cent at 7,633.91 points (close)

Paris - CAC 40: DOWN 0.5 per cent at 5,501.88 (close)

Frankfurt - DAX 30: DOWN 0.7 per cent at 13,010.55 (close)

EURO STOXX 50: DOWN 0.6 per cent at 3,505.02

New York - Dow Jones: DOWN 0.8 per cent at 24,970.49

Tokyo - Nikkei 225: UP 0.5 per cent at 22,851.75 (close)

Hong Kong - Hang Seng: DOWN 0.4 per cent at 30,309.49 (close)

Shanghai - Composite: DOWN 0.7 per cent at 3,021.90 (close)

Euro/dollar: UP at US$1.1617 from US$1.1580 at 2100 GMT

Pound/dollar: UP at US$1.3289 from US$1.3270

Dollar/yen: DOWN at 110.53 yen from 110.64 yen

Oil - Brent Crude: DOWN US$2.47 at US$73.47 per barrel

Oil - West Texas Intermediate: DOWN US$2.00 at US$64.89 per barrel