US open: Losses on the Street following China tariff announcement

US stocks opened to losses on Friday as relations between the US and China soured again, renewing fears of a trade war.

At 1600 BST, the Dow Jones Industrial Average was down 0.85% to 24.961.26, while the S&P 500 had lost 0.44% to 2,770.13 and the Nasdaq dropped 0.42% to 7,728.65 after China vowed to retaliate quickly following news that Donald Trump had approved $50bn-worth of tariffs on the import of goods from China.

The approval followed a 90-minute meeting on Thursday of Senior White House officials, national-security officials and senior representatives of the Treasury, Commerce Department, and US Trade Representative's Office.

A formal announcement revealed that the US would impose 25% tariffs on more than 800 Chinese products worth more than $50bn on 6 July.

Trump warned that if China retaliates, as it had previously promised to, the US will impose even more tariffs.

The present said the tariffs were "essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs."

David Morrison, senior market strategist at GKFX, said that concerns about rising trade tensions come on top of the quarterly expiry of US stock index futures and options - something that can often lead to a spike in volatility.

Meanwhile, IG analyst Joshua Mahony said: "Trump is clearly used to getting things his own way, yet with his decision to fight on all fronts on trade, we are essentially seeing him bet the house on the notion that the likes of China, the EU and Canada will eventually cave in to his demands."

On the corporate front, AT&T shares lost another 0.57% a day after completing its takeover of Time Warner.

On the macroeconomic calendar, manufacturing activity in the New York Fed's jurisdiction unexpectedly improved in June, according to data released on Friday.

The New York Fed’s Empire State index rose to 25 from 20.1 in May, surpassing expectations for a reading of 18.8 and hitting the highest level since October.

According to the survey, 38% of respondents said that conditions had improved over the month, while 13% said they had worsened, while the new orders index was up five points to 21.3 and the shipments index rose four points to 23.5.

Elsewhere, US industrial production fell unexpectedly last month as manufacturing output more than gave back April's gains as motor vehicle assembly lines ground to a halt.

Total industrial output dipped by 0.1% month-on-month in May, according to the Federal Reserve, falling shy of economists' forecasts for an increase of 0.3%.

Lastly, US consumer sentiment improved more than expected in June, according to a reading from the University of Michigan.

The index of consumer sentiment rose to a three-month high of 99.3 from 98.0 in May and 95.0 in June 2017. This was above the 98.5 reading economists had pencilled in.

Meanwhile, the index for current conditions increased to 117.9 from 111.8 in May and 112.4 in June last year and the index of consumer expectations fell to 87.4 this month from 89.1 in May but was up from 83.8 in June 2017.