Zürcher Nachrichten - Stocks shudder after Trump threatens new tariff war with China

Trump slammed China for hostile trade practices, including imposing new export controls on rare earths, and threatened Beijing with "massive" tariff hikes.

Other major countermeasures were "under consideration", he said, adding that he no longer felt it necessary to meet China's President Xi Jinping at a summit later in the month.

Trump's sharp pivot sent Wall Street's major indices sharply lower, with the Nasdaq down two percent in late morning trading.

The dollar fell against its main rival currencies.

Washington and Beijing had been de-escalating trade tensions after a tit-for-tat tariffs war earlier this year, with the Trump-Xi meeting expected to help prolong a shaky truce.

However China on Thursday announced new controls on the export of rare-earth technologies and items, adding to regulations on a critical industry that has been a key source of tension between Beijing and Washington.

Oil prices had already fallen more than two percent as the Gaza ceasefire took effect, easing concerns about a wider regional conflict that could disrupt supply.

The US benchmark oil contract, WTI, fell under $60 per barrel.

Trump's China remarks, which threaten to slow trade and economic activity, sent prices down even further, with both WTI and Brent down more than three percent as European markets closed.

European markets also slid after Trump's comments.

Paris finished the day down 1.5 percent as French President Emmanuel Macron was due to pick a head of government tasked with lifting the country out of political crisis following his last prime minister's resignation.

The week was marked by a raft of new records in several markets, with the tech-heavy Nasdaq index, the Frankfurt stock exchange and gold prices reaching new heights. Silver also surged to a decades-long high.

Buying sentiment won a boost this week from news that ChatGPT-maker OpenAI had signed multi-billion-dollar chip deals with US firm AMD as well as South Korean titans Samsung and SK hynix.

The spending added to the hundreds of billions already pumped into the sector as firms look to get ahead in the sphere of artificial intelligence.

That in turn has seen investors flood into the tech sector, sending stock prices rocketing -- with US chip leader Nvidia topping a $4 trillion market capitalisation.

However, there are rumblings that the rally could run out of steam, causing jitters on trading floors.

"The AI bubble debate remains a hot topic: some argue this is the new internet bubble 2.0 waiting to burst, others think it's a bubble that still has room to inflate," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Such worries have been part of the reason behind the rally in gold to a record price above $4,000 an ounce Wednesday.

- Key figures at around 1530 GMT -

New York - Dow: DOWN 1.0 percent at 45,900.22 points

New York - S&P 500: DOWN 1.4 percent at 6,640.18

New York - Nasdaq Composite: DOWN 2.0 percent at 22,563.26

London - FTSE 100: DOWN 0.9 percent at 9,427.47 (close)

Paris - CAC 40: DOWN 1.5 percent at 7,918.00 (close)

Frankfurt - DAX: DOWN 1.5 percent at 24,241.46 (close)

Tokyo - Nikkei 225: DOWN 1.0 percent at 48,088.80 (close)

Hong Kong - Hang Seng Index: DOWN 1.7 percent at 26,290.32 (close)

Shanghai - Composite: DOWN 0.9 percent at 3,897.03 (close)

Euro/dollar: UP at $1.1628 from $1.1558 on Thursday

Pound/dollar: UP at $1.3357 from $1.3294

Dollar/yen: DOWN at 151.62 yen from 153.14 yen

Euro/pound: UP at 87.06 pence from 86.94 pence

Brent North Sea Crude: DOWN 3.1 percent at $63.20 per barrel

West Texas Intermediate: DOWN 3.1 percent at $59.45 per barrel

dan-bcp-lth-rl/sbk

R.Schmid--NZN