Investing.com - Here are the top five things you need to know in financial markets on Friday, March 23:
1. China strikes back against Trump tariffs
After U.S. President Donald Trump signed a memorandum announcing tariffs on about $50 billion worth of Chinese exports a day earlier, citing China’s unfair seizure of U.S. intellectual property, China warned the U.S. to “pull back from the brink”.
“China doesn't hope to be in a trade war, but is not afraid of engaging in one,” the Chinese commerce ministry responded in a statement in which it outlined plans to target agricultural goods important to rural U.S. regions that tend to support Trump.
The world’s second largest economy announced plans to levy additional duties on up to $3 billion of U.S. imports including fresh fruit, wine and nuts in response to import tariffs Trump announced earlier this month on steel and aluminum, which were due to go into effect on Friday.
2. Stocks sell off as trade war fears escalate
Trump’s tariff announcement led to a sharp selloff on Wall Street Thursday that quickly spread to Asian stocks as investors fretted than a standoff between the U.S. and China could impact global trade.
Miners stocks were particularly hard hit, while Australia’s stock exchange slumped 2% over concerns of the impact on its biggest export, iron ore. Japan’s Nikkei led losses in Asia, slumping around 4.7%, while China’s Shanghai Composite closed down 3.4%.
European shares fell on Friday with tech, basic resources stocks and banks bearing the brunt of a wide sell-off triggered by worries that U.S. tariffs on imports from China could escalate into a fully-blown trade war.
U.S. futures also pointed to further losses at the open on Wall Street. At 5:56AM ET (9:56GMT), the blue-chip Dow futures fell 189 points, or 0.79%, S&P 500 futures lost 16 points, or 0.60%, while the Nasdaq 100 futures slid 72 points, or 1.06%.
3. Gold spikes 1% as traders flock to safe haven
Gold prices spiked to a one-month high in early morning trade on Friday as mounting fears over the prospect of a trade war stoked demand for the precious metal.
Investor interest in bullion is regaining momentum as the trade fight stokes concerns global growth will slow, hurting risk assets including equities and industrial commodities such as steel.
Gold, which was received support on Wednesday as the Federal Reserve held its forecasts for just a total of three rate hikes and was perceived to be less hawkish than feared, was on track for weekly gains of more than 2%.
Gold futures for April delivery on the Comex division of the New York Mercantile Exchange jumped $15.10, or around 1.14%, to trade at $1,342.40 by 5:57AM ET (9:57GMT). That was its highest level since February 20.
4. Dollar breaks below 105 level vs. yen
The dollar slumped further against the yen to this week’s lowest point of 104.65, breaking the 105 level, on Friday as investors are stocked up on the safe-haven currency during the recent bout of market volatility
At 5:57AM ET (9:57GMT), USD/JPY shed 0.38% to 104.87, even as the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.17% at 89.33.
Traders in the greenback will also keep an eye on durable goods orders and new home sales out later in the session.
In the wake of this week’s Fed decision to hike rates by 25 basis points, market participants will also pay attention to appearances from Atlanta Fed chief Raphael Bostic, Minneapolis Fed president Neel Kashkari and Dallas Fed president Robert Kaplan.
5. Oil gets boost on hints of production cut extension
Oil prices continued to rise on Friday, bolstered by news that production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and Russia could be extended into 2019.
Saudi Arabian Energy Minister Khalid al-Falih said on Thursday that OPEC members will need to continue coordinating with Russia and other non-OPEC oil-producing countries on supply restraints in 2019 to reduce the global oil oversupply.
OPEC, of which Saudi Arabia is the de-facto leader, has been cutting crude output by 1.8 million barrels per day (bpd) to prop up oil prices.
U.S. crude oil futures rose 0.22% to $64.44 at 6:07AM ET (10:07GMT), Friday, while Brent oil gained 0.06% to $68.95.
Offsetting OPEC-led production cuts, increasing output stateside has been stoking concerns that the escalation of U.S. shale would counteract attempts to rebalance the market.
Market participants will get the latest indication of the status quo when Baker Hughes releases its most recent weekly rig count data later on Friday.