European Shares Likely To Drift Lower As Trump's Tariffs Take Effect

(RTTNews) - European shares are seen opening sharply lower on Wednesday as the latest set of U.S. tariffs, including a massive 104 percent levy on Chinese imports, take effect today, leaving investors worried about the impact on inflation, interest rates and global growth.

"Trade wars are extremely negative. Nobody wins with a trade war. Everybody tends to lose", UN Secretary-General Antonio Guterres said.

France's President Emmanuel Macron told reporters during his visit to Egypt that the main objective when it comes to the United States tariffs now is to achieve a situation where U.S. President Donald Trump reverses his decision. Nonetheless, he reiterated that a response would come if there is no deal.

The White House said many countries are lining up at the negotiating table in hopes of striking deals, with Korea and Japan among the first countries to negotiate with the U.S. directly.

Trump's economic advisor Kevin Hassett said that there are "a lot of concessions on the table" and that U.S. trade negotiators are prioritizing allies, not China, in trade talks.

Beijing, meanwhile, said it has the necessary tools to handle economic challenges. Economists and investors anticipate a potential recession if these levies persist.

Amid much uncertainty about the economic outlook, traders are also likely to keep an eye on the minutes of the latest Federal Reserve meeting for further direction.

Asian markets fell sharply this morning, with Japan's Nikkei index falling more than 4 percent as the yen buying remained unbated for the second day running.

The dollar weakened against major peers while the offshore yuan rebounded after sinking to the lowest since it began trading in 2010.

Gold jumped more than 1 percent amid risk aversion prevailing in financial markets. Oil extended a brutal selloff on demand concerns.

U.S. stocks reversed a strong early rally to end sharply lower overnight as the White House said that it expects 104 percent tariffs on China to go into effect on Wednesday, when Trump's other "reciprocal tariffs" are also set to take effect.

The S&P 500 tumbled 1.6 percent to end below 5,000 points for the first time in almost a year, losing $5.83 trillion in market value and marking its steepest four-day drop since the index was created in the 1950s.

The tech-heavy Nasdaq Composite plummeted 2.2 percent and the Dow shed 0.8 percent.

European stocks snapped a four-session losing streak on Tuesday amid hopes for a negotiated resolution to the trade conflict arising from U.S. tariffs.

The pan European STOXX 600 rallied 2.7 percent. The German DAX and France's CAC 40 index both surged by 2.5 percent while the U.K.'s FTSE 100 soared 2.7 percent.