US stocks ended week with deep sellof on trade war worries

S&P 500 Index plunged more than 2 per cent, all 30 members of the Dow Jones Industrial Average retreated on Friday

A trader on the floor of the New York Stock Exchange. US stocks ended the week with deep selloff, leaving them lower the for the five days. Lucas Jackson / Reuters

US stocks ended the week with deep selloff, leaving them lower the for the five days as the White House’s latest trade bluster rattled global financial markets.

The S&P 500 Index plunged more than 2 per cent and all 30 members of the Dow Jones Industrial Average retreated as President Donald Trump ordered a review of additional tariffs that prompted an aggressive response from China. Fresh attempts by White House officials to tone down the bluster failed to calm nerves, with the Cboe Volatility Index back above 21. Treasury Secretary Steven Mnuchin added to the anxiety by saying there’s a “level of risk” the spat could worsen.

Trump said the market turmoil was short-term “pain,” but insisted the outcome would leave the US in a better position. The president’s top economic adviser said the US and China are holding “back-channel discussions” to resolve an escalating trade dispute that has unsettled global financial markets. China earlier said no talks were ongoing.

The trade tensions overshadowed the latest US jobs report, which showed hiring cooled by more than forecast in March. The renewed saber rattling provided a bookend to a week that started with equities tumbling amid amplified rhetoric. That gave way to a three-day rally after White House officials signaled the president’s tough talk was part of a negotiating plan.

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“It’s bad when this happens on a Friday, because then people get freaked out over the weekend,” Donald Selkin, New York-based chief market strategist at Newbridge Securities, said. “The worst thing you want to see is a bad market late on a Friday.”

The S&P 500 fell 2.2 per cent in New York, capping a 1.4 per cent drop in the week. The Nasdaq Composite Index slid 2.3 per cent and the Dow lost 2.3 per cent.

In Europe, the Stoxx Europe 600 Index fell 0.4 per cent, paring a weekly gain to 1.1 per cent, while The MSCI All-Country World Index fell 1.2 per cent.

In the currencies market the Bloomberg Dollar Spot Index fell 0.2 per cent. The euro rose 0.4 per cent to $1.2286, the British pound gained 0.7 per cent to $1.4094, while the Japanese yen rose 0.5 per cent to 106.895.

The yield on 10-year Treasuries declined 6 basis points to 2.77 per cent, the largest fall in more than a week. The two-year rate fell 4 basis points to 2.266.