The trade war has markets staggering again
(FinancialPress) — The effect of the White House‘s latest round of flak towards Chinese exports made itself visible almost immediately.
The United States revealed it is weighing the possibility of hiking the proposed rate of tariffs imposed to goods imported from China from 10% all the way to 25% for goods valued at $200 billion
Several global markets were affected by the news. The Japanese Nikkei lost 1%, while Hong Kong‘s Seng dropped 2.2%. The German DAX went down by almost 2% while France‘s CAC 40 dipped 0.9%. US stock futures also lost value.
BOCOM International‘s Hao Nong weighed in on the issue: “The trade war is the big driving factor. With much still evolving, it’s difficult to price in the uncertainties.”. BOCOM is a broker with operations in multiple major markets.
China‘s goods worht $34 billion were already subject to a 25% tariff by the US administration. The measure was taken as punishment for alleged unfair trade practices. China retaliated immediately by applying the same tariff to US goods.
Nick Twidale, Broker Rakuten Securities Australia‘s chief executive officer, showcased that “Markets are now wary of the next step in the trade war between the United States and China,”. He added that upcoming moves could shift sentiment send many markets into a tailspin.
The worst part of Shanghai trading‘s losses befell on tech and industrial companies focused on exports. Since its late January peak, China has become the worst performing major stock market in 2018. From then to now, its combined shares have lost over 20% in value.
Investors are beginning to cast doubt over the lagging Chinese economy‘s ability to survive an escalating trade dispute with the Trump administration.
New data begins to show the negative effects of the newly-enacted tariffs on China‘s economy. Its purchasing managers index for July showed that the country‘s massive export industry is slowing down. The index is designed to showcase the health of the manufacturing sector.