Market concludes Fed can't save the economy from a trade war

THE US stock market had its worst week in months and the selling could continue as investors lose confidence that the Federal Reserve can save the US economy from a trade war.

President Donald Trump used the covering fire of an interest-rate cut to drop his latest trade bomb, tweeting a threat last Thursday to levy a 10 per cent tariff on another US$300 billion of goods, meaning that practically all Chinese imports would be subject to the border levy.

The next day, China vowed to retaliate if the threat was carried out, ending the ceasefire agreed at the Group of 20 meeting in Japan in end-June was all but over.

Stocks had rallied last Thursday morning before Mr Trump's tweet, …