US President Donald Trump responded in a series of tweets, writing that “American companies are hereby ordered to immediately start looking for an alternative to China.”
The Dow Jones Industrial Average fell 623.34 points, or 2.37 percent, to 25,628.9, the S&P 500 lost 75.84 points, or 2.59 percent, to 2,847.11 and the Nasdaq Composite dropped 239.62 points, or 3 percent, to 7,751.77.
The pan-European STOXX 600 index turned sharply lower after Trump’s tweets, dropping 1 percent in the last half hour of trading to close down 0.78 percent, while MSCI’s gauge of stocks across the globe dropped 1.57 percent.
The tweets “certainly heightened concerns about trade and its drag on global growth,” Craig Bishop, lead strategist of the fixed income group at RBC Wealth Management at Minneapolis, told Reuters.
Oil prices also dropped on trade tensions.
Brent crude futures fell 58 cents, or 1%, to settle at $59.34 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $1.18, or 2.1%, to settle at $54.17 a barrel.
WTI lost 1.3 percent for the week, while Brent rose 1.2 percent during the week.
“We still view the U.S.-Chinese trade standoff as a major bearish consideration that will likely be requiring additional downward oil demand adjustments as this year proceeds,” Jim Ritterbusch, president of Ritterbusch and Associates told Reuters.
Middle East markets
In Saudi Arabia, the index fell 0.7 percent as Samba Financial Group lost 2.6 percent and National Commercial Bank slipped 0.8 percent.
Dubai’s index dropped 0.8 percent as Emaar Properties slid 2.5 percent, while Emirates NBD traded 1.3 percent lower.
Abu Dhabi’s index was flat, with First Abu Dhabi Bank gaining 0.3 percent.
Qatar's index rose 0.4 percent as market heavyweight Industries Qatar increased 1.4 percent.
Egypt's blue-chip index closed 0.2% down. Eastern Co fell 0.6 percent and Emaar Misr dropped 1.9 percent.
Bahrain’s index edged up 0.1 percent while Oman’s index rose 1.5 percent and Kuwait’s premier market index was flat.
The dollar dropped following the escalation in trade tensions.
The dollar index .DXY, which measures the greenback against a basket of six major currencies fell 0.47 percent.
Gold prices surged on Friday as investors moved away from risky assets to safe havens.
Spot gold rose 1.9 percent at $1,526.60 an ounce by 1801 GMT.
U.S. gold futures settled up 1.9% to $1,537.60.
(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)
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