World shares plummet as trade war fears prompt global sell-off

Irish, UK, US and wider European shares fell sharply on Tuesday on a global sell-off which started in Asia prompted by fears of a full blown trade war between the US and China.

In the UK, disappointing domestic corporate news weighed, while in the US, the Dow erased its gains for the year as investors rushed to safer assets. While equities suffered, safe haven assets including the dollar, yen and Swiss franc all rose.

Dublin

Ireland's benchmark Iseq overall index dropped 0.4 per cent on Tuesday to €7,053.16 with index heavyweight CRH suffering on the back of escalating US China trade tensions.

Building materials giant CRH fell 1.43 per cent to €31.3 as increased as rhetoric surrounding trade tariffs in the US upped a gear.

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Cairn Homes was the biggest faller on the benchmark index, down almost 3 per cent at €1.766. Central Bank of Ireland governor Philip Lane said the he expects property prices to "cool off" over time as supply increases.

Ireland's pillar banks had a positive day on the stock market, with AIB up 1.52 per cent to €4.95 and Bank of Ireland advancing 1.49 per cent to €6.80. That comes after Bank of America Merrill Lynch upgraded the bank to a "buy" rating on Monday.

Aside from Cairn, Providence Resources was one of the big losers on the day, falling 2.27 per cent to €0.129.

London

The FTSE 100 ended down 0.4 per cent while the mid-cap FTSE 250 index fell 0.8 per cent. Exposing troubles in the UK retail sector, Debenhams fell 10 per cent after the department store chain warned on profit for the third time in six months, blaming increased competitor discounting and weakness in key markets.

Among smaller retail stocks, Footasylum dropped 52 per cent after the fashion retailer reported full-year revenues below expectations.

Another profit warning, at McCarthy & Stone, sent shares in the UK's biggest builder of homes for retirees down 17 per cent. Results from equipment rental firm Ashtead also disappointed investors, sending its shares down 4.4 per cent.

British satellite company Inmarsat rose 2.9 per cent after a report of a possible higher bid from US group EchoStar.

Europe

Europe’s main equity benchmark, the STOXX 600, fell for the third straight session, down 0.7 per cent.

The STOXX 600 recovered slightly after German chancellor Angela Merkel and French president Emmanuel Macron agreed on a euro zone budget, which traders said was a helpful show of unity.

Italian banks, up 1 per cent, were further supported after the European Central Bank’s top supervisor said the central bank could adopt a softer approach in pressing banks to reduce bad loans.

Germany's DAX, home to some of the carmakers that Trump has explicitly targeted in his tariffs rhetoric, fell the most, down 1.2 per cent. BMW, Daimler and Volkswagen dropped 0.8 to 2.4 per cent.

Industrial conglomerate Siemens was one of the biggest drags on the STOXX, along with French planemaker Airbus.

New York

The benchmark S&P 500 touched its lowest level in over two weeks, while the Dow fell below its 50-day and 100-day moving averages, considered key technical indicators of short- and near-term momentum.

The sell-off was broad, with 24 of the 30 Dow components in the red and seven of the 11 major S&P sectors lower.

Shares of Boeing, which has acted as a proxy for trade war tensions with China as it is the single largest US exporter to the country, fell 3.2 per cent.

Construction equipment maker Caterpillar closely followed and was down 3.3 per cent.

Chipmakers, which depend on China for a large portion of their revenue, also slipped, with Intel down 1.6 per cent.

Tariff worries dragged FedEx down 2.2 per cent and weighed heavily on the Dow Jones Transport index.

– Additional reporting: Reuters