Market Update: Dow Plunges 700 Points as Trump Unveils $60 Billion China Tariffs

President Trump’s new trade war with China wreaked havoc on the financial markets Thursday, with the Dow Jones plunging over 400 points on fears that an overly protectionist agenda will curb trade and economic growth.

Stocks Plunge on Trade-War Jitters

All of Wall Street’s major indexes finished lower on Thursday, with the Dow plunging 724.42 points, or 2.9%, to 23,957.89. That was its lowest settlement since early February. All 30 index members finished in negative territory, with industrials, aerospace contractors and financials leading the decline.

The broader S&P 500 Index plunged 2.5% to 2,643.69, with nine of 11 primary sectors heading lower. The inversely-related CBOE VIX Volatility Index surged more than 30% to 23.34, a five-week high.

The technology-heavy Nasdaq Composite Index fell 2.4% to finish at 7,166.68.

European markets also suffered huge losses on Thursday, with the pan-European Stoxx 600 Index closing down 1.6%. Major bourses from London to Madrid were also down.

Trump’s Targets Trade Deficit

The Trump administration on Thursday unveiled $60 billion in new tariffs designed to punish China for theft of U.S. intellectual property. President Trump said “this is the first of many” trade actions against Beijing for its role in exploiting U.S. intellectual property for its own benefit.

The tariffs follow U.S. Trade Representative Robert Lighthizer’s 301 investigation into China, which uncovered a multitude of unfair trade practices. Lighthizer told fellow lawmakers on Thursday that China will likely retaliate against the new measures by targeting U.S. agricultural goods.

Beijing’s trade surplus with the U.S. has swelled to a record $375 billion. The administration believes that long-term deficits have a negative impact on U.S. business and domestic labor.

China’s Foreign Ministry said it was unfair of the Trump administration to punish the country for not buying enough U.S. goods. Ministry spokeswoman Hua Chnying pointed to Washington’s export controls on high-tech products as a major reason for the growing deficit.

“How many soybeans should China buy that are equal to one Boeing aircraft? Or, if China buys a certain number of Boeing aircraft should the U.S. buy an equal number of C919s?” Hua said, referencing China’s new passenger jet.

Crypto Market Sputters

The cryptocurrency market was down by as much as much as $19 billion on Thursday amid reports that Japan was pursuing a regulatory crackdown of unregistered exchanges. Quoting unnamed sources, Nikkei reported that the Financial Services Authority (FSA) was planning to issue a warning against Binance, the Hong Kong-based exchange that was operating in the country without a license.

Nearly 1,600 cryptocurrencies tracked by CoinMarketCap saw their value fall to $326 billion on Thursday. They would later recover near $331 billion for a loss of around $10 billion.

Bitcoin and the top-four altcoins all headed lower for the day. Most major cryptos outside the top five also finished in the red.

Even with the decline, cryptos have rebounded more than 21% from Sunday’s swing low near $275 billion.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi