A sell-off in Asian stocks spilled over into European equities and US futures on Thursday as the Trump administration’s latest threats to free trade rattled markets. The dollar climbed and bonds were mixed with central bank policy high on the agenda.
The Stoxx Europe 600 Index dropped for a second day, tracking sharp declines in China and Hong Kong share indexes which were triggered by the American president asking his trade representative to consider hiking tariffs on $200 billion worth of Chinese goods as early as next month. Futures on the Dow, S&P 500 and Nasdaq also pointed to a weaker open.
Ten-year JGB yields touched the highest since February 2017 before paring gains as the Bank of Japan made an unscheduled offer to buy bonds. Treasury yields fell after reaching 3 percent this week for the first time since June as the Federal Reserve unanimously decided to leave rates unchanged while making it clear borrowing costs are headed higher. The dollar climbed against most of its major peers, while the offshore yuan edged lower, and the pound fell before a rates decision.
Asia assets were under pressure as higher US tariffs on Chinese goods look increasingly likely, with President Trump asking the US trade representative to consider increasing proposed levies on $200 billion in imports to 25% from 10%. The latest phase of the protectionist saga overshadowed an upbeat message on the U.S economy from the Federal Reserve. Up next, the Bank of England, which is expected to raise its key rate by 25 basis points to 0.75%.
Elsewhere, oil steadied around a two-week low after a surprise gain in U.S. crude inventories exacerbated supply concerns. Gold rose and copper extended a decline. Turkey’s lira hit a record low as the US imposed sanctions on its NATO ally over the imprisonment of an American pastor. — Bloomberg

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