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Major US equity indices slumped during the opening hour of trade on Thursday amid signs of escalating US-China trade tensions.

Fears of a full-blown trade war between the world’s two largest economies returned to the spotlight after the US President Donald Trump proposed 25% tariffs on $200 billion worth of Chinese imports, up from an original 10%.

Subsequent response from Beijing, saying that it was ready to escalate the trade war added to the latest development in the trade battle and rattled global financial markets, overshadowing a batch of better-than-expected corporate results.

As has been the case in the recent past, shares of trade-sensitive companies were hit the most, with a decline in the so-called FAANG group of stocks further collaborating to the early weakness.  

Today’s decline comes after the Fed’s upbeat outlook for the domestic economy, which reaffirmed expectations that the central bank will raise interest rates at least two more time by the end of this year.  

On the economic data front, the US initial weekly jobless claims rose by 1,000, albeit remained near their lowest levels since the 1970s as market focus turns to Friday’s highly anticipated monthly jobs report.