World markets sink as Donald Trump raises spectre of trade war — and no Kim summit

London — Global stocks sank on Wednesday after US President Donald Trump said he was not satisfied with talks aimed at averting a trade war with China.

Equities were also dented by poor eurozone economic data, and as Trump cast doubt on a planned summit with North Korean leader Kim Jong-un.

“Trump [is] continuing to drive uncertainty over global trade,” said analyst Joshua Mahony at trading firm IG. “European markets are following their Asian counterparts lower, as a pessimistic tone from Trump is compounded by downbeat economic data.”

Markets had surged on Monday after US treasury secretary Steven Mnuchin and Chinese vice-premier Liu He said they had agreed to pull back from imposing threatened tariffs on billions of dollars of goods and continue talks on a variety of trade issues.

However, Trump has declared he is “not satisfied” with the status of the talks, fuelling worries that the world’s top two economies could still slug out an economically painful trade war.

Investors sought to dump risky equities as they fretted over the news, while Trump also warned that there was “a very substantial chance it won’t work out” when asked about next month’s landmark talks with Kim. He added the summit could be delayed or even called off if the North did not agree to give up its nuclear weapons.

And while the dollar rallied, the euro, the pound and the embattled Turkish lira all tumbled, with political turbulence in Italy triggering a huge sell-off of assets there, according to Fawad Razaqzada of

According to Charles Schwab analysts: “Italian political uneasiness is also prevailing as the markets grapple with the populist coalition government’s choice for prime minister and potential fiscal implications of its policy proposals.” Adding to the nerves, a key survey showed on Wednesday that the pace of growth of eurozone business activity continued to slow in May, as companies became less optimistic about the state of the economy in Europe.

Data monitoring company IHS Markit also flagged strong slowdowns in France and Germany, though employment growth in the 19-country single currency bloc remained robust. The purchasing managers’ index (PMI) by IHS Markit fell to 54.1 in May, which was lower than forecast by analysts. A figure over 50 indicates the economy is expanding.

“A whole raft of eurozone PMI surveys have continued to shed a worrying picture of economic progress within the region,” noted analyst Mahony.

Later on, dealers will digest minutes from the US Federal Reserve’s most recent policy meeting for some clarity on plans for raising interest rates this year.