Bulletin Headline Summary from RanSquawk:
- Trump is said to be planning new restrictions on tech exports to China
- PBoC says they are to cut the re-lending rate for SME loans by 50bps, following the RRR cut over the weekend
- Looking ahead, highlights include, US New Home Sales and BoJ’s Sakurai speaking
Global stocks are diving in what has been a generally quiet session, amid renewed trade war fears following reports that the Treasury Department is planning to heighten scrutiny of Chinese investments in sensitive U.S. industries under an emergency law, putting Washington’s trade war with Beijing on what Bloomberg dubbed a “potentially irreversible course”, while at the same time Trump threatened “more than reciprocity” to trade barriers.
According to overnight news reports, the US Treasury is devising rules to block firms with 25% Chinese ownership from acquiring companies involved in industrially significant technologies and that it plans using International Emergency Economic Powers Act 1977 to impose investment restrictions. “This one could well result in an escalating trade war,” Lee Ferridge, a macro strategist at State Street Corp., told Bloomberg TV in Hong Kong. “Volatility is going to continue to rise from here.”
Adding to the trade war jitters, an EU internal memo says trade crisis “set to deepen in coming months” and warns of the breakdown of rules-based trading. The EU Commission has also warned of a direct response to any new taxes on EU cars imported into the US.
The result has been a sea of red with European equities following Asia lower from the open, with the mining and auto sectors underperforming, resulting in a sea of red across global stock markets.
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