Market buzz: Markets 'in risk-off mode', tariffs hit US aeros and autos

1535: French government spokesperson Benjamin Grievaux has said there is "no question of a softening or weakening in face of a unilateral decision taken by the US on steel", adding that Paris wants to ensure trade law and the principle of reciprocity in its commerce with America are respected.

Against that backdrop, as of 1535 BST the Stoxx 600's gauge of Basic Resource firms is trading down by 2.36% at 440.18, alongside a fall of 2.09% to $2.9995 a pound.

1522: The Dow is off its worst level, back above 23,700 as US ISM non-manufacturing index has dipped to 58.8 in March from 59.5, remaining close to its 13-year high, which economists said suggests that the apparent slowdown in GDP growth in the first quarter will not be sustained.

"Admittedly, although the headline reading was roughly in line with consensus expectations, the 5-point drop in the new orders index was a little alarming," said Capital Economics. "That said, this index was previously at a 13-year high and at 59.5 it remains above its average level in 2017. The other sub-indices held up much better, with the rise in the employment index to 56.6, from 55.0, providing further evidence that labour market conditions remain strong. Along with the ADP private payroll survey released earlier today, this supports our view that overall non-farm payrolls expanded by an above-consensus 250,000 last month."

1515: Have some Fedspeak from James Bullard of St Louis fame. “It is not necessary in this circumstance to raise the policy rate further in order to put downward pressure on inflation, since inflation is already below target,” Bullard says, speaking to the good people of the Arkansas Bankers Association in Bill Clinton's home town of Little Rock.

1505: Every member of the Dow Jones index is in the red as the US-China trade skirmish heats up.

The Dow Jones opened down around 500 points to below 23,600, with the S&P and Nasdaq both down around 1.5% with Boeing stock sent reeling by China's tariffs on planes, carmakers Ford and General Motors hit by the tariff on autos.

1315: US private sector payrolls jumped by 241,000 last month, according to ADP (consensus: 200,000), with the prior month's gains revised up from 235,000 to 246,000.

"[This] supports our estimate that the official non-farm payroll measure will show an above-consensus 250,000 gain when the data are released this Friday," says Capital Economics.

1253: Reuters is citing US Commerce Secretary Wilbur Ross as having said that the US will not lose if it gets to a trade war.

1047: Ahead of the US open, European equity markets all weaker, with the FTSE 100 down 0.43% and close to breaching below the 7,000 level again.

With China coming back with a "robust response" to the proposed US tariffs on Chinese goods, with an extra 25% tariff on 106 US products including soybeans and aircraft, analysts at TD Securities say markets "are in risk-off mode, with USD weaker, equity markets lower, and fixed income firmer".

Germany's DAX one of the worst performers, down 1.1%. 10y Treasury yields and 10y Bund yields are both down about 0.8 basis points and Brent crude oil is down almost 1.8% at $66.95.

EURUSD is up 0.15%, with a touch weaker eurozone CPI data having little impact. Emerging markets forex mostly weaker against the dollar, Turkey's lira being the underperformer, down 0.6%, and the zloty up 0.25% on yet another weak Polish CPI print.

1044: Shares in Mothercare are up after it appointed a new chief executive with immediate effect as Mark Newton-Jones steps down. The retailer said new CEO David Wood, ex of US grocery retail and pharmaceutical business Kmart, has a "strong" track record for turning around growing retail businesses.

1035: Eurozone CPI has printed at 1.4%, which is in line with forecasts.

This offers some respite for the ECB and Mario Draghi, says Anthony Kurukgy, senior sales trader at Foenix Partners, "giving more substance to the ECB, this combined with a drop in the unemployment rate (8.5%) brings monetary policy normalization another step closer".

1033: Three-month LME copper futures are down to $6,772 per metric tonne from the prior day's close of $6,800.

1010: Collapsed drinks business Conviviality is in talks to sell its wholesale business to Magners cider maker C&C Group once it has appointed administrators later on Wednesday.

0931: The trade war is here, cries analyst Naeem Aslam at Think Markets, as soybean prices take a nosedive after China's tariffs announcement and market moves send gold spiking. "China has taken out big guns to answer Trump’s tariff, the trade war is here. Farmers over in the US are going to be very nervous as China is planning to put tariffs on soft commodities such as soybean."

"Agriculture isn’t the only sector which China is targeting, it is only a start. China announced $50 billion of reciprocal tariffs on the US goods. We know that it was the US which was going to lose more by adopting these tariffs."

The US aircraft industry, also a target of the Chinese reciprocal tariffs has seen the pre-market prices for Boeing down 3.4%.

Aslam noted that the typical risk-off trade was in full swing as the dollar has dropped and the gold price has spiked. "Traders have become more risk-averse as a result of these reciprocal tariffs and we expect the risk appetite amidst traders to go lower."

0901: WPP shares are down more than 2% after the ad giant said it had commissioned an independent legal counsel to investigate an allegation of personal misconduct against chief executive Martin Sorrell.

0838: Investors do not seem that impressed with Smith & Nephew's new CEO, with the shares slipping slightly into the red. This seems a little unfair, as Namal Nawana is a 15-year Johnson & Johnson veteran and has fresh experience from last year of selling Alere to US giant Abbott.

0831: Wednesday's London open market report finds stocks little changed in early trade despite a recovery on Wall Street overnight, amid further skirmishes in the US-China trade war. At 0830 BST, the FTSE 100 was flat at 7,032.60, while the pound was steady against the dollar at 1.4057 and 0.1% firmer versus the euro at 1.1467.