On Sunday, the President of the United States, Donald Trump threatened to increased tariffs on imports from China from 10% to 25%. This led to a market-wide panic sell-off as expected. There is an upcoming meeting in Washington this week to discuss the trade deal. However, Trump’s comments led investors to believe that the conclusion of the trade deal will not be favorable to the Chinese yuan.
The U.S -China trade war has been ongoing for a while now and it has affected the stock market dearly. On Monday, Dow dropped by over 450 points due to a panic sell-off. Other stocks were affected but it was followed by a rally in the afternoon of the same day. In the afternoon, Dow moved up by 0.3% gaining more than 66.47 points in a steady surge. As the market bleed out stocks that were closely related to China – technology, material, and industrials declined the most. Nasdaq composite fell by 0.5% while S&P 500 fell by 0.4%.
According to Robert Lighthizer, a United States Rep, the United States is considering taking a harder stance because China is pulling out of commitments it made previously. He said that while the talks will continue, they will most likely raise tariffs on Chinese imports on Friday morning. This comment, along with the comment Trump made, contributed to a sell-off on Monday morning. The fact that the stock market was down in the morning and up in the afternoon shows that the investors are confident in other factors that would keep the market stable this year and not just worried about the negative effects of the trade war.
Delegates from China are preparing to meet with the United States delegates in Washington on Monday for the trade talks according to the spokesperson of the foreign ministry. Hopefully, both parties will be able to reach a compromise that will be beneficial to the United States and China.