By Sin?(C)ad Carew and April JoynerMarch 2 (Reuters) - Shares in big U.S. steel companies andmanufacturers were under pressure on Friday on uncertainty overthe effects of U.S. President Donald Trump's announcement of aplan to impose tariffs on steel and aluminum.
Steel stocks were volatile and some erased part of theprevious day's gains, as investors worried threats ofretaliation from overseas trading partners would halt or waterdown Trump's promise of hefty import tariffs.Shares also fell in sectors that could be hurt by thetariffs - from rising prices for steel and aluminum buyers suchas car and machinery makers, to the threat of possiblecounter-tariffs against U.S. companies such as Harley-Davidson , who sell their products overseas.Trump struck a defiant tone on Friday, saying trade warswere good and easy to win, after his plan to put import tariffsof 25 percent on steel and 10 percent of aluminum triggeredglobal criticism and a slide in stock markets. "The President took a dump truck and dumped a heap ofuncertainty onto the market," said Michael Antonelli, managingdirector, institutional sales trading at Robert W. Baird inMilwaukee. "We have a tailwind from tax reform and when youthrow in a cross wind of tariffs the boat starts rocking.Uncertainty brings about selling."Harley-Davidson shares fell, last down 3.0 percent, afterEuropean Commission President Jean-Claude Juncker told Germantelevision that Europe would put tariffs on their motorbikes, aswell as bourbon and jeans. Shares in Caterpillar , a buyer of raw materials anda big exporter of construction machinery products, were down 2.6percent after falling 2.8 percent in the previous day's session.General Motors, also a metal consumer and exporter, was down 1.9percent."Does this turn into a trade war? That's the worst-casescenario," said Quincy Krosby, chief market strategist atPrudential Financial in Newark, New Jersey.In comparison, the broader S&P 500 fell 0.5 percentafter a 1.3 percent drop on Thursday.
While steel companies soared on Thursday, investors edgedaway from the sector on Friday as their conviction ebbed thatthe tariffs would be implemented. After rising 5.7 percent in the previous session, shares inU.S. Steel were last down 2.8 percent at $44.73 afterhitting a low of $43.22 earlier in the day.
Nucor Corp shares were down 0.7 percent after rising3.3 percent the day before."There's clearly equity market disappointment in the Trumpproposal. People are probably thinking maybe it's not going togo through," said JPMorgan steel analyst Michael Gambardella,adding that the lack of details in Trump's statement made theindustry impact "very hard to predict."Two analysts also said a downgrade of U.S. Steel by a bigbank could be hurting the sector, on top of weaker than expectedresults from Olympic Steel , which was down 8.6 percentat $21.30.
Shares in AK Steel were up 0.2 percent at $5.66after hitting a low of $5.41 earlier in the day. They rose 9.5percent on Thursday. (Reporting By Sinead Carew in New York, Editing by RosalbaO'Brien)
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