Phnom Penh: World markets fell sharply this week amidst heightened tensions in the US-China trade war where the Chinese government made clear it would retaliate against US tariff increases and blacklisting of Chinese firms.
“We oppose a trade war but are not afraid of a trade war,” said Chinese vice foreign minister Zhang Hanhui. “This kind of deliberately provoking of trade disputes is naked economic terrorism, economic chauvinism, economic bullying.”
US government officials have pushed back hard on claims that it is causing unnecessary global economic uncertainty, including its own, in squeezing China with tariffs and blacklists.
“Somehow there is this idea that President Trump’s decision to push back against China caused problems for the American economy, when in fact, the challenges have been the fact that the Chinese were in a trade war with us a long time ago,” said US Secretary of State Mike Pompeo in a US TV interview.
In the US, Wall Street was hit with major losses this week as the Dow Jones posted four-month lows, down 221 points, while the S&P 500 index dropped 19 points. In London, the FTSE 100 fell by more than 100 points, while stock markets in Germany, Italy and France were also hit. Japan’s Topix index of leading company shares closed down by 0.9 percent and Hong Kong’s Hang Seng index dropped by 0.6 percent.
“Recent data points suggest US earnings and economic risk is greater than most investors may think,” wrote Michael Wilson, Moran Stanley’s chief US equity strategist, in a report this week.
As the US-China trade war ramped up this month, Asian finance ministers from ASEAN+3 member states met to boost regional financial integration and local currency bonds to secure their economies in the midst of global recession fears.
“Call it scare-mongering if you like, but many of the data releases (last) week had the unmistakable whiff of a recession,” chief U.S. economist Paul Ashworth of Capital Economics told MarketWatch in a recent interview.