The global stock sell-off intensified on Friday, as the fallout from the threat of a US-China trade war continued to rattle markets.

The S&P 500 extended Thursday’s losses with another 2.1 per cent drop, capping a weekly fall of 6 per cent — its worst one-week decline since 2016.

The Dow Jones industrial average fell 424 points, or 1.8 per cent, to its lowest level since November. The S&P 500 fell 52 points, while the Nasdaq fell 174 points, or 2.4 per cent.

The S&P blue-chip average is on the verge of putting in its worst March since 1980, when it declined 8.97 per cent, according to WSJ Market Data Group. The Dow is presently down 5.98 per cent or 1,496 points for the month.

On Thursday, China announced planned to impose reciprocal tariffs on 128 US products that had an import value of about $US3 billion last year.

US President Donald Trump had earlier announced new tariffs on $US50 billion worth of Chinese goods, with the aim of reducing the $US375 billion trade deficit the US has with China.

Along with recent trade developments, the US is also in a diplomatic spat with China over Taiwan while President Trump added to the fear and uncertainty on Friday night by threatening to veto a $US1.3 trillion spending bill which would have shut down the government.

Capital has flowed into safe-haven assets as gold rose by more than 1% while the Japanese yen reached its highest level against the US dollar since November 2016. US 10-year bond yields held steady at around 2.81%.

And an increasing number of analysts are now reassessing their outlook for stocks, as protectionist rhetoric and geo-political tensions cast doubt over the continuation of synchronised global growth.

The washup is that ASX200 futures are pointing sharply lower, with the local index likely to fall below 5,800 on Monday morning to its lowest level since October last year.

Otherwise, it’s a quiet week of data ahead in Australia leading into the Easter break. Globally, key data will be headlined by PCE inflation figures in the US on Thursday night.

The financials sector was the biggest loser among the 11 on the S&P 500. On the Dow, Boeing and Nike were the only stocks in positive territory.

The Dow Jones

The drop on Friday pushed the S&P 500 9 per cent below its peak in late January, just short of the 10 per cent threshold at which the index enters a correction.

Meanwhile, Dropbox soared during its trading debut. Shares of the cloud-computing company gained by as much as 44 per cent in trading amid the broader market’s weakness.


This article first appeared on Business Insider Australia, Australia’s most popular business news website. Follow Business Insider on Facebook or Twitter.