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Fresh concerns have emerged over global trade relations as a crucial phone call between US President Donald Trump and Chinese President Xi Jinping was unexpectedly postponed, sparking renewed fears of an imminent trade war between the world’s largest economies.
The diplomatic setback arrives amid escalating tensions, with China implementing retaliatory tariffs ranging from 10 to 15 per cent on US imports, including liquefied natural gas, coal, crude oil, and agricultural equipment. Beijing has also launched an antitrust investigation into Google’s parent company Alphabet, signalling a multi-pronged approach to counter US pressure.
European markets displayed resilience despite the mounting tensions. The FTSE 100 experienced a modest decline of 0.2 per cent, settling at 8,570.77, while Germany’s DAX 40 and France’s CAC 40 showed gains of 0.4 and 0.7 per cent respectively. Wall Street demonstrated notable strength, with the S&P 500 rising 0.7 per cent to 6,037.88 and the tech-heavy Nasdaq advancing 1.4 per cent to 19,654.02.
The trade tensions have triggered significant movement in currency markets, with the British pound strengthening against both the euro and dollar, reaching €1.202 and $1.247 respectively. Gold prices have also responded to the uncertainty, climbing 0.7 per cent to establish a new record of $2,853.30.
Investment analysts at Goldman Sachs have indicated that European companies face substantial exposure risks if trade tensions escalate between the EU and US. However, they suggest the FTSE 100 might demonstrate resilience due to the UK’s service-oriented economic structure.
The Bank of England is anticipated to implement a 25 basis point rate cut on Thursday, while market observers speculate that the Federal Reserve may need to reassess its interest rate strategy if US inflation rises due to tariff impacts.
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