Market Review US & UK(March 05, 2018)
U.S. stock market ended mixed on Friday, with the Dow weakening slightly, the S & P 500 and Nasdaq erasing early losses to end higher as investors saw reactions to the announcement of excessive commodity tariffs.
The Dow, however, fell for a fourth straight session and the main index suffered a sharp weekly loss. Most of the weakness came after President Donald Trump on Thursday announced tariffs on steel and aluminum imports, and then increased the rhetoric surrounding the potential for trade war, regarded as a major political risk to the market.
The DJ Jones Industrial Average of DJIA, -0.29%, fell 70.92 points, or 0.3%, to finish at 24,538.06, after earlier falling as much as 391 points. The McDonald's MCD Blue-chip component of -4.77% is the biggest barrier on average, down 4.8%, for the largest one-day percentage drop since October 2008.
Concerns over the prospect of a global trade war have rattled the market since the tariff announcement, beginning with a presidential tweet from Friday that "the trade war is good, and easy to win." Some of the biggest US trading partners have threatened to retaliate, including the European Union, which says it will bring the issue to the World Trade Organization.
Trump on Thursday said that he will sign orders next week by setting a 25% tariff for steel imports and a 10% tariff for aluminum. "You will have protection for a long time," Trump told steel industry executives. Many U.S. companies using steel and aluminum in production, such as aircraft manufacturers and beverage companies.
Tariffs can reduce the cost of goods, which in turn will raise the selling price or reduce profits, if the manufacturer absorbs the cost.
European shares fell on Friday, with steelmakers among those heavily affected. The losses came after President Donald Trump said he imposed tariffs on steel and aluminum imports to the USS, which sparked fears that a global trade war could happen.
European politics also became the focus, with British Prime Minister Theresa May outlining his much anticipated vision for Britain's post-Brexit relationship with the European Union. Over the weekend, the Italians will lead elections in general elections, while a vote by the Social Democratic Party may decide the German government.
European SXXP 600 Index, -2.09%, decreased 2.1% to end at 367.15. That keeps the benchmark down 3.7% for the week, breaking a two-week drop in a row.
European stocks fell after Trump said late Thursday that he would sign an order to impose a 25% tariff on steel imports and 10% on aluminum imports to Trump U.S. said that the measure would provide "long-term protection" for U.S. steelmakers.