Global stock markets have plunged across the board today amid fears of a US trade war against Europe and a worsening economic picture.
Read more: US factories suffer worst month since 2009
The World Trade Organization (WTO) this afternoon ruled that the US has the right to slap punitive tariffs on $7.5bn (£6.1bn) worth of goods from the European Union over illegal subsidies to Airbus.
Wine, luxury goods such as handbags and aircraft parts from the EU could be hit by tariffs up to 100 per cent. The decision was the result of a bitter 15-year dispute over subsidies to aircraft firms.
Britain’s FTSE 100 – also beset by recession fears and political crisis – suffered its worst day since 2016 when it closed 3.2 per cent lower.
“We are seeing European stocks hit hard in anticipation of a widening rift between the US and EU, leading to a similar tit-for-tat trade war,” said Joshua Mahony, senior market analyst at online trader IG.
France’s CAC 40 was down 2.8 per cent shortly before the close, Germany’s Dax index had dropped 2.4 per cent and the pan-European Euronext 100 was 2.7 per cent lower.
US stock markets also suffered under the news that the US President Donald Trump’s administration has been given the green light to turn its sights on Europe.
The Dow Jones industrial average and S&P 500 were 1.8 per cent lower while the Nasdaq had dropped 1.7 per cent.
Connor Campbell, financial analyst at Spreadex, said October was “off to a dreadful start”.
Yesterday, the US manufacturing sector was shown to have had its worst month in ten years in September. Data from UK and Eurozone factories was similarly grim.
“The WTO clearing the runway for an aggressive escalation on another front in Trump’s trade war is exactly the opposite of what investors wanted to hear,” Campbell said.
He said recent data showed that hostilities between the US and China were “clearly having an impact on the global economy”.
Trump suggested said that the stock market weakness was not due to economic weakness or his administration’s trade policies, however.
He tweeted: “All of this impeachment nonsense, which is going nowhere, is driving the Stock Market.”
(Image credit: Getty)