US stocks bounced higher and European equities rose on Tuesday as investors refined their response to the intensifying trade war between the US and China. But pressure remained on Asian indices, where weakness continued into Tuesday after Beijing’s retaliation to increased tariffs from the White House, although China’s currency also found support. On Wall Street, the S&P 500 rebounded by 0.3 per cent having fallen 2.4 per cent on Monday, its worst one-day loss since January. London’s FTSE 100 rose 0.9 per cent amid demand for its mining stocks. Frankfurt’s Xetra Dax 30 added 0.4 per cent. Hong Kong’s Hang Seng index lost 1.5 per cent as traders caught up with the latest trade-related drama following a holiday on Monday. China’s CSI 300 fell 0.6 per cent and Japan’s Topix was down 0.4 per cent. China’s offshore renminbi suffered its worst day since July on Monday, weakening more than 1 per cent against the dollar. It was slightly firmer against the dollar on Tuesday. The sell-off in riskier assets, which began early last week, had been given renewed oomph when China on Monday said it would increase tariffs on $60bn worth of American imports. That move was in retaliation to the Trump administration’s decision to slap higher duties on $200bn worth of Chinese goods. Donald Trump confirmed on Monday that he would meet his Chinese counterpart, Xi Jinping, at a G20 summit in Japan next month. Some think markets could stay volatile in the meantime. “Both sides have the incentive to act half-crazy and unpredictable before that in order to cut a better deal,” said Larry Hu, China economist at Macquarie Capital.
