Global financial markets reeled on Monday after U.S. President Donald Trump unexpectedly jacked up pressure on China to reach a trade deal in the midst of negotiations, saying he would hike U.S. tariffs on Chinese goods this week.
Equity markets, which have been largely expecting the two sides to reach a trade agreement soon, fell sharply as further talks to end their bruising trade war were thrown into doubt.
The trade war has resulted in billions of dollars of losses for both sides, while inflicting collateral damage on export-reliant economies and companies from Japan to Germany.
Chinese shares plunged more than 5 percent, while U.S. stock market futures fell 2 percent. Oil prices sank and the Chinese yuan weakened sharply.
Trump sharply escalated tensions between the world's two largest economies with tweeted comments on Sunday that trade talks with China were proceeding "too slowly", and that he would raise tariffs on $200 billion of Chinese goods to 25 percent on Friday from 10 percent.
He also said he would target a further $325 billion of Chinese goods with 25 percent tariffs "shortly".
The tweets upended the previously calm market mood that had benefited from signs of improving economic growth in China and the United States, and from comments from Trump and other senior U.S. officials that trade talks were going well.
The Wall Street Journal reported on Monday that China was considering cancelling trade talks scheduled for this week following Trump's threats.
"I think this has got the potential to be a real game-changer," said Nick Twidale, Sydney-based analyst at Rakuten Securities Australia.
"There is still a question of whether this is one of the famous Trump negotiation tactics, or are we really going to see some drastic increase in tariffs. If it's the latter, we'll see massive downside pressure across all markets," he said.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 2 percent as markets across the region fell deep into the red.
Chinese blue-chips lost more than 6 percent at one point in the morning session, having closed higher before a three-day national holiday amid expectations that pressures on China's economy were easing. They later clawed back some losses, and finished the morning session down 5.5 percent.
To get profitable financial guidance, give one missed call on 9644405057. We offer 2 days of free trial. Our packages are affordable. Click here to visit our website: Option Tips
No comments:
Post a Comment