U.S. stock futures extended declines Friday after President Donald Trump said that trade wars were "easy to win", suggesting his plan to impose stiff import tariffs on steel could ignite harsher reaction from around the world.
U.S. equity futures, which had attempted to stabilize in European early trading following yesterday's sharp declines that loped more than 400 points from the Dow Jones Industrial Average and clipped 1.33% from the broader S&P 500, slumped further as impact of Trump's trade strategy became clearer to global investors and he appeared to double-down on his tariff plan.
Contracts tied to the Dow suggest an implied opening decline of 240 points while those tied to the broader S&P 500 were marked 19.25 points lower from last night's close while Nasdaq futures were priced 80 points to the downside.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don't trade anymore-we win big. It's easy!
- Donald J. Trump (@realDonaldTrump)March 2, 2018The Stoxx Europe 600 benchmark fell 1.77% to a three week low of 368.21 points while Germany's DAX performance index, which is heavily-reliant on U.S. exports, tumbled more than 2.42% to a six-month low of 11,896.82 points.
European steelmakers fell sharply Friday, while regional auto and aerospace stocks extended declines, as investors re-priced stocks in the wake of planned tariffs, with ArcelorMittal falling 3% in the opening in Amsterdam to change hands at ?,?26.90 while Germany's ThyssenKrupp AG (TKAMY) , the second-largest in Europe, was marked 3.3% to the downside in Frankfurt, extending its year-to-decline to around 10%. Domestic rival Salzgitter AG (SZGPY) slipped 3.9% to ?,?43.75 each.
Markets were further unsettled by Powell's second appearance on Capitol Hill this week, during which he suggested that the Fed could hike rates as many as four times this year as the economy continues to improve, a view that was partly supported by firm reading of the Fed's preferred inflation gauge, the PCE index, earlier Thursday.
Overnight in Asia, a sharp pullback in U.S. Treasury bond yields, which fell to a three-week low of 2.79%, pushed the U.S. dollar index lower and, along with broader concerns over trade disputes, held down gains for regional benchmarks.
Japan's heavily export-focused Nikkei 225 fell 2.5% amid a surge in the yen, taking the benchmark to 21,181.64 points by the close of trading. The region-wide MSCI Asia ex-Japan index was marked 0.91% lower at 571.33 points.