Stock Markets Tumble Amid Heightening Concerns Over Trade

Global markets shuddered Thursday as investors began to take seriously the prospect of a trade war between the world’s two largest economies.

Stocks in the United States fell for a second straight day, as President Donald Trump announced $60 billion worth of annual tariffs on Chinese imports, and concerns about growing trade tensions mounted.

After wobbling throughout the day, the S&P’s 500 index turned decisively lower in the last hour of trading, closing down by 2.5 percent. That put the index into negative territory for the year.

The trade measures against China were the latest demonstration of Trump’s “America First” agenda, and were announced a day before tariffs on global steel and aluminum imports were expected to take effect.

The potential ripples of the trade actions have unsettled investors.

In Asia, markets opened Friday to heavy selling as investors across the region reacted negatively to the news from Washington. In Tokyo, where the market opened first, shares fell 3.5 percent in early trading. In Seoul, South Korea, the heavy selling followed, with shares on the main Kospi index down more than 2 percent.

Chinese investors reacted with panic, sending shares of companies listed in Shanghai and Shenzhen down by 2.5 percent. In Hong Kong, where many Chinese companies choose as a first port of call to list outside of China, stocks were down 2.8 percent.

Large exporters, whose fortunes could be harmed by a trade war, were hit especially hard on Thursday. Shares of Boeing, one of the country’s largest exporters, and Caterpillar, which counts China as an important market, both fell more than 5 percent.

Shares of large technology companies, which already have been reeling in anticipation of tougher government oversight, also took a hit. Facebook, which has been contending with a crisis over data privacy, slumped by more than 2 percent. Alphabet, Google’s parent company, dropped by more than 3.7 percent.

Amid the dip in stocks, money flowed to government bonds as investors sought safety, briefly driving yields on the benchmark 10-year Treasury note below 2.8 percent. Yields move in the opposite direction of bond prices. Commodities heavily geared toward global growth also fell. The price of West Texas intermediate crude oil, the U.S. benchmark, slipped 1.2 percent. Copper, an important industrial metal, dropped 0.9 percent.

Thursday’s decline is the latest in a series of jolts to stock markets in the past two months.

After more than a year of calm, in which stock markets glided to one record high after another, a wave of volatility is suddenly cresting. There have been many causes of the turbulence this month and last. Investors initially were fearful the economy was getting too strong, and that rising wages might cause inflation, which would push the Federal Reserve to raise interest rates faster than investors previously had expected. Those concerns have partly faded as recent economic data showed inflation remained in check.

More recently, market anxiety has shifted toward worries about geopolitics.

A growing public backlash against technology companies has increased the chances that lawmakers and regulators in the United States and elsewhere will intensify their scrutiny of them. Shares of those companies have helped propel markets to record highs, and their recent declines have led markets lower.

Now, the prospect of a trade war between China and the United States, the two largest economies, has added to the gloomy sentiment. Among the concerns is that protectionism poses a risk to the health of the world economy. On Thursday, for example, the Bank of England warned that the erection of international trade barriers could have a “significant negative impact” on global growth.

Stock markets around the world have reflected the worries. A leading European index, the Stoxx 600, fell more than 1.5 percent Thursday. In Germany, whose economy is dependent on exporting products all over the world, the DAX index dropped 1.7 percent.