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Stock markets dropped on Friday after U.S. President Donald Trump proposed tariffs on more Chinese products, making trade tensions much worse.

Trump said late on Thursday that he had told the trade officials to consider $100 billion in additional tariffs on China, igniting the trade dispute between the world’s two economic superpowers.

China's Ministry of Commerce said it would take new comprehensive measures to safeguard the country's interests if the United States stuck to its protectionist behavior, stating that it would counter U.S. protectionism "to the end, and at any cost".

Asian and European Stocks

Asian stocks declined early on Friday in a knee-jerk reaction to Trump's latest tariff proposal but recovered a measure of calm following Wall Street's strong performance overnight.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.15 percent.

Australian stocks recovered from an earlier drop to rise 0.1 percent. South Korea's KOSPI lost 0.6 percent. Japan's Nikkei nudged down 0.1 percent and Hong Kong's Hang Seng advanced 0.5 percent.

Meanwhile, spreadbetters expected European stocks to open lower, with Britain's FTSE falling 0.5 percent, Germany's DAX shedding 0.85 percent and France's CAC losing 0.75 percent. Additionally, the euro was steady at $1.2243.

US Stocks, Dollar

The Dow and the S&P 500 kept their gains for the third day in a row on Thursday amid the back-and-forth of the latest trade dispute, with some investor focus turning to upcoming earnings.

Beyond the trade havoc, financial markets are focused on Friday's U.S. non-farm payrolls report, which could decide the pace of future Federal Reserve interest rate rises and the dollar's direction.

Meanwhile, the dollar was little changed at 107.385 yen after earlier falling to 106.990 on Trump's latest tariff proposal.

The dollar had risen to a one-month peak of 107.490 yen overnight, bolstered by Wall Street's bounce on Thursday when the United States appeared to signal a willingness to resolve the trade dispute.

The dollar index against a basket of six major currencies was nearly unchanged at 90.453. The has risen 0.4 this week.

China "Ready for Possible Trade War

FSMNews

After Trump ordered his administration to consider tariffs on an additional $100 billion in Chinese goods on Thursday, sending U.S. stock futures tumbling, China’s Commerce Ministry said in a statement in Beijing on Friday that the notion doesn’t want a trade war, but is ready to fight one.

"The Chinese side will follow suit to the end and at any cost, and will firmly attack, using new comprehensive countermeasures, to firmly defend the interest of the nation and its people,” the Commerce Ministry said in a statement on its website, without further detailing any planned measures.

Trump’s unexpected move threatens to unravel efforts by top U.S. and Chinese trade officials to lower the heat and reach an agreement that fends off a mounting conflict, after the release of a list of tariff targets earlier this week prompted immediate threats of retaliation from Beijing.

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