US open: Stocks fall sharply as fears of a trade war intensify

US stocks fell sharply after the opening bell on Wednesday as trade war concerns reared their head again, sending the Dow's constituent components down across the board as America and China's 'tit-for-tat' intensified.

At 1500 BST, the Dow Jones Industrial Average and Nasdaq were down 1.56% and 1.25%, respectively, while the S&P 500 was 1.12% weaker.

The downbeat opening call came as China revealed a fresh round of tariffs on 106 US goods including soybeans, cars, aircraft and chemicals, just hours after President Trump's administration unveiled a list of around $50bn in Chinese electronics, aerospace and machinery products that it plans to target with a 25% tariff.

Beijing said it "strongly condemns and firmly opposes" the proposed US tariffs, which it said were "unrealistic and protectionist".

David Madden, market analyst at CMC Markets, said: "It would appear that gloves are off in relation to the trade war between the two largest economies in the world. Dealers will be half expecting retaliation from President Trump, and the exodus from equities is likely to continue."

Meanwhile, David Cheetham, chief market analyst at XTB, said: "There has been a lot of rhetoric surrounding trade wars for some time now, but the transformation of these threats into actions in recent days is alarming and is clearly roiling markets.

"Not only are the markets directly impacted by the tariffs selling off, but there has also been notable weakness in stocks since the news broke with European markets falling to their lowest level of the week. The latest set of tariffs isn't set to be implemented immediately but it is hard to picture either Trump or XI Jinping backing down for fear of looking weak."

Cheetham said that looking at historical precedents for tariffs, the 25% level remains relatively small compared to the 100% or higher that President Reagan and other administrations imposed on Japanese products in the 1980s and 1990s.

However, he said there is every chance that today’s developments don’t represent the high-water mark.

"Other goods may well be drawn into this, as well as the possibility of a higher than 25% levy being implemented going forward."

Shares in Boeing, whose main end market is China, were sharply lower as well, erasing 4%.

Tesla shares on the other hand were managing to almost completely trim an initial drop of as much as 5% after analysts dissected its first-quarter production and delivery numbers.

Amazon stock was also trading down after the company, with the internet retailer's shares still under pressure following Donald Trump's attacks against it via Twitter.

Music-streaming service Spotify remained in the spotlight during its second day of trading too after debuting with a bang on Tuesday, although its shares later ended lower.

Elsewhere, home builder Lennar rose 6.93% following a better-than-expected earnings report, while used-car seller CarMax nudged forward after releasing its own results.

On the data front, ahead of Friday's non-farm payrolls, ADP estimated that the American private sector added 241,000 new jobs in March, following the 246,000 in February - beating estimates for 205,000.

Markit's services PMI and the ISM non-manufacturing PMI were due in at 1445 BST and 1500 BST, respectively, as the ISM non-manufacturing index was expected to have edged down to 58.6 in March from 59.5 the month before, indicating a more modest expansion in the service sector,

In addition, speeches were due from St Louis Fed President Bullard and Cleveland Fed President Mester later in the day.