Fundamental Comment

European shares drop on simmering US-China tensions

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European shares retreated on Wednesday as escalating trade war tensions between the United States and China propelled investors to damp risky assets and resort to safe havens.

STOXX Europe 600 index subtracted 1.21 percent to 364.65 points and Euro STOXX 50 shed 1.24 percent to 3,305.33.

Germany’s DAX 30 slipped 1.57 percent to 11,813.71, French CAC 40 edged down 1.03 percent to 5,099.77.

U.K. FTSE 100 plunged 0.60 percent to 6,988.27.

In an escalation to the trade war between the U.S. and China, the later announced a list of 106 US products, worth $50 billion, which will incur a new 25 percent tariff.  

China’s deputy commerce minister, Wang Shouwen, said his country was forced to do such step, but insisted that China did not want a trade war.

Once both tariffs have been implemented, there will be 25% tariffs on $100bn of trade between the U.S. and China.

The Japanese yen strengthened against major currencies, led by the U.S. dollar, where the USDJPY pair fell to 105.98.

Safe-haven gold climbed to set a new peak of $1344.98 an ounce, compared to the session’s open at $1332.59.

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