Currency traders watch the computer monitors near the screen showing the foreign exchange rate at the foreign exchange dealing room in Seoul, South Korea, Thursday, May 9, 2019. Asian shares were mostly lower Thursday amid investor jitters ahead of the latest round of trade talks between the U.S. and China. (AP Photo/Lee Jin-man)
Global stock markets remained under pressure Thursday after China's Commerce Ministry said Beijing would retaliate if the U.S. follows through with a plan to raise tariffs on Chinese imports.
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Following earlier widespread losses in Asia, Europe's main markets were all in the red. Britain's FTSE 100 was down 0.3% to 7,253 while Germany's DAX declined 0.7% to 12,097. France's CAC 40 was 1.1% lower at 5,355. U.S. stocks were poised for falls at the bell too, with Dow futures and the broader S&P 500 futures down 0.6%.
The negative tone that has gripped markets this week was triggered by a threat from President Donald Trump to go ahead with plans to impose more tariffs on Chinese goods this Friday.
The U.S. government has filed plans to raise tariffs on $200 billion worth of Chinese imports from 10% to 25%. The Trump administration has also threatened to extend 25% tariffs to another $325 billion in Chinese imports, covering everything China ships to the United States.
On Thursday, Beijing said it will impose "necessary countermeasures" if the increases take effect as planned, the ministry said. It gave no details but a ministry spokesman said Beijing has made "all necessary preparations," suggesting it might be bracing for worsening conflict.
Such moves would mark a sharp escalation in the trade dispute that has raised prices on goods for consumers and companies.
Negotiations are scheduled to continue in Washington on Thursday, and to include China's top trade official, raising some hopes in the markets that there will be a last-minute deal to prevent another round of tariffs.
"With representatives from both sides meeting for a final time ahead of tomorrow's potential tariffs increase, many will see Trump's tone as yet another move in a high-stakes chess game which clearly has further to run," said Joshua Mahony, senior market analyst at IG.
The possibility that the dispute could escalate represents a marked shift from just a few weeks ago, when talks between the U.S. and China appeared to be on track for an agreement. Hopes for a deal contributed to double-digit gains in all the major indexes so far this year.
The U.S. and China have already raised tariffs on tens of billions of dollars of each other's goods in their dispute over U.S. complaints about Beijing's industrial and technology policies and a perennial U.S. deficit in trade with China.
Earlier in Asia, Hong Kong's Hang Seng index skidded 2.3% to 28,324.46, while South Korea's Kospi sank 3% to 2,102.01. Japan's Nikkei 225 slipped 0.9% to 21,402.13. The Shanghai Composite index declined 1.5% to 2,850.95. Shares also fell in Taiwan, India and most of Southeast Asia, but rose in Thailand and in Australia, where the S&P/ASX 200 gained 0.3% to 6,290.40.
Benchmark U.S. crude fell 3 cents to $62.09 a barrel in electronic trading on the New York Mercantile Exchange while Brent crude, the international standard, rose 14 cents to $70.51.
The euro was steady at $1.1186 while the dollar declined 0.3 percent to 109.81 yen.