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#MoneyBeat WSJ City PM: China Vows To ‘Hit Back Forcefully’ on Tariffs, US Hiring Slows, Why Bearish Investors is a Reason for Optimism

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Good afternoon from the WSJ City desks in London. WSJ City is the app that delivers concise, smart news on business and finance for mobile. Download for iPhone or Android. Here’s essential reading on today’s developments.

MUST READS FROM WSJ CITY

China vowed to ‘hit back forcefully’ if the US imposes newly threatened additional tariffs on $100 billion worth of Chinese goods, as trade tensions mount between the world’s two largest economies. Chinese Commerce Ministry spokesman Gao Feng described as ‘very unreasonable’ and ‘extremely wrong’ President Donald Trump’s announcement that he was considering penalties on an additional $100 billion in Chinese goods.

A week of mounting tensions between the US and China saw yet more volatility injected in financial markets. Investors shunned riskier assets, moving towards the relative safety of government debt, and commodities that could be affected by the threatened tariffs sold off. There were also important updates about the state of the American and British economies. Here are five takeaways from markets this week.

The pace of US hiring slowed in March and the unemployment rate held at a 17-year low, hinting that a tight labour market is making it more difficult for some businesses to find workers. The lacklustre headline jobs number has some investors backing off expectations for a more rapid pace of Fed rate increases. The US dollar and Treasury yields fell on the news.

Investor sentiment has quickly shifted from extremely optimistic to outright bearish – an encouraging contrarian signal for those market participants who have long worried Wall Street was overly bullish. Why It Matters: Investors often worry most when everybody else in the market gets very bullish, with many analysts noting that Wall Street optimism has often reached its highs right before big market falls.

The Trump administration levied sanctions against more than three-dozen Russian individuals and entities, targeting senior Russian government officials, some of President Vladimir Putin’s closest oligarch allies and the companies they own. The action is in response to what senior US officials say are Moscow’s subversion of democracy, hostile cyber activities and its intervention in the Syrian war.

Holding cash is investment heresy after a decade of the lowest interest rates in history. But with reasons to think twice about both stocks and bonds, it’s time to consider the sacrilegious and add cash back into portfolios, writes WSJ’s senior markets commentator James Mackintosh.

European Union governments have a fraught history with referendums, writes Valentina Pop for Brussels Beat. The Dutch government is in the process of scrapping a law adopted just three years ago that allows consultative referendums on almost any matter if backers can get 300,000 signatures on a petition.

Trump’s personal issues with Amazon, remembering the chef who wanted to changed the world, and the future of office fashion. Kick back with the best of our weekend reading.

 

IN THE PAPERS

Three Die as Protests Kick Off Again at Gaza-Israel Fence – The Wall Street Journal

Fatal Crash Tests Role of Safety Drivers in Autonomous Cars – Financial Times (£)

India Seeks $15 Billion Fighter Jets in World’s Largest Deal – Bloomberg

Poisoned Russian Ex-Spy Is No Longer in Critical Condition – The Wall Street Journal

South Korean Court Jails Former President Park for 24 Years – Reuters

MARKETS TODAY

Global stocks dropped sharply as the tit-for-tat rhetoric on tariffs between the US and Chinese governments continued to knock markets.

The Dow Jones Industrial Average had fallen around 1.5% in midday trading, while the S&P 500 and tech-heavy Nasdaq Composite were each down 1%.

In Europe, the regional Stoxx Europe 600 closed 0.4% lower.

The decline in stocks came after China forcefully responded to President Donald Trump’s announcement late on Thursday that the US is considering an additional $100 billion in tariffs on Chinese goods, saying Beijing would ‘resolutely counterattack and take new comprehensive measures in response.’

The trade worries also knocked bond yields lower. The yield on the benchmark 10-year US Treasury note fell to 2.799%, according to Tradeweb, from 2.830% on Thursday. Yields move inversely to prices.

Meanwhile, the latest jobs report for March showed that wages grew at a steady rate, tamping down investors’ inflation fears, even as US employers did less hiring than expected last month, suggesting that a tight labour market is making it more difficult for some businesses to find workers.

The dollar fell 0.2% against a basket of currencies tracked by the WSJ.

Follow our live markets coverage here.

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