World stock markets sink as Trump stokes fears of trade war

Technology shares were among the sectors worst hit

World stock markets sink as Trump stokes fears of trade war

A screen above the trading floor of the New York Stock Exchange (NYSE) shows the closing number for the Dow Jones industrial average, Thursday, March 22nd 2018 | Image: Richard Drew/AP/Press Association Images

World stock markets have tumbled as investors fret over the prospect of a damaging trade war between the globe's two largest economies.

Technology shares - already under pressure over the Facebook data scandal - were among the sectors feeling the most pain as US President Donald Trump proposed action against China over what he sees as intellectual property theft.

The US president launched his protectionist agenda earlier this month - to save US jobs.

While the EU will escape imminent trade tariffs on steel and aluminium imports because of continuing negotiations, China is expected to face their full force when the measures come into force on Friday.

At a news conference, Mr Trump confirmed additional sanctions against Beijing were being prepared for the alleged theft of US technology across a wide range of goods and services - from software to fake Ralph Lauren polo shirts.

He pointed to a US us$504bn (€409bn) trade deficit with the country and said tariffs on up to €68.7bn of Chinese goods could be in place following a 60-day consultation period.

Officials are also drawing up potential restrictions on Chinese investments in the US.

"We want reciprocal (trade)", Mr Trump said.

The government in Beijing has vowed to take "all necessary measures" to defend its interests and has already threatened retaliatory tariffs on US cars and agriculture.

Fears of a tit-for-tat trade war between the US and China saw US and European stocks markets fall sharply and bonds rally as investors took some shelter.

US-traded shares in Chinese digital marketplace Alibaba were down by 5.5% after the announcement as New York's stock markets endured their worst day since early February.

The Dow Jones closed more than 700 points, or 3%, lower.

In Dublin, the ISEQ fell 1.28% to 6,517 at the close of business.

Lodon's FTSE 100 had earlier closed below the 7,000 point barrier for the first time since December 2016 - leaving it perilously close to losing 10% of its market value in the year to date.

The markets have taken fright because of the potential for a trade war damaging the global economic recovery.

Higher costs pose a big risk to jobs, wages and investment.