US open: Stocks down across the board on 'trade war' talk

Trading on Wall Street followed another downbeat session with yet another on Friday, as news that the US will impose tariffs on steel and aluminium imports sparked fears of a trade war.

At 1515 GMT, the S&P 500 and Nasdaq were down 0.89% and 0.86%, respectively, while the Dow Jones Industrial Average fell back 1.35%.

Within just the last month, Wall Street had witnessed both its best weekly performance in five years and its worst week since 2016.

Stocks suffered losses on Thursday after President Trump said at a meeting with American steel and aluminium producers that he plans to sign off on measures next week to impose a 25% tariff on steel imports and a 10% tariff on aluminium, to protect US companies.

However, domestic manufacturers said the tariffs would drive up prices and analysts pointing to the cost of higher inflation at least in the very near term.

In a similar vein, Australia called the news "disappointing", while Canada said the tariffs are "unacceptable", while European Commission President Juncker said the EU "will react firmly and commensurately to defend our interests".

For his part, the vice secretary general of the China Iron and Steel Association was rather more critical, labelling it "an extremely stupid move".

Trump tweeted on Friday: "When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore - we win big. It’s easy!"

Craig Erlam, senior market analyst at Oanda, said Trump has long been accused of prioritising protectionist populist measures over those that will benefit both domestic and global growth, something he has repeatedly dismissed, claiming the measures being considered were aimed at making trade fair and reciprocal.

"He may be able to persuade his core voter base of that but investors are far from convinced, as was evident by the market reaction to the announcement.

"This move isn’t only bad for steel and aluminium producers, protectionist measures such as tariffs are bad for everyone who's costs have now increased, which impacts companies and end consumers. And these measures are unlikely to be a unique case, other countries will now consider counter-measures against the US which won’t necessarily target this particular sector.

"The announcement has also come at a time when investors sentiment is already fragile, with markets having been rocked by the prospect of more aggressive monetary tightening, which Trump is already partially responsible for after passing the tax reform measures late last year. For someone so obsessed with stock market performance, he’s taking a big gamble with these tariff’s, the benefits of which are questionable."

In corporate news, Foot Locker shares tumbled 14% after saying it swung to a net loss in the fourth quarter and issuing a downbeat outlook.

JC Penney tumbled 10.23% after its fourth-quarter earnings were dragged down as a result of Amazon taking much of its market share, and JD.com shares dialled back 7.50% as the cost of revenues rose 40% for the December quarter.

In economic news, the University of Michigan consumer sentiment index was the strongest it had been in 14 years throughout February, with a final reading coming in at 99.7 – a whole 4 points higher than January's reading.

Consumers had a seemingly positive assessment of jobs, wages, and higher after-tax pay, according to the University of Michigan said, as the highest number of households since 1998 reported an improvement to their finances compared to a year earlier.

The report also revealed the tax cuts had not received universal support, unlike previous reductions.