September 29, 2020

International Markets Show Signs Of Improvement AMID Us-China Negotiations On Trade War

The US and China trade war have had a significant impact on the global economy. Just when the experts thought that the tensions were decreasing, China announced it’s tariffs on $75 billion worth of US goods and this step by China had a significant impact on the automobile sector of the US. Just a day after the Chinese announcement of tariffs, Donald Trump announced tariffs on $550 billion worth of Chinese products and it’s impact was felt globally. Stocks around the globe felt its aftershocks, where Germany’s DAX fell almost 0.2 pc, Japan’s Nikkei downed 2.2pc, Australia’s S&P/ASX 200 downed 1.3pc, South Korea’s Kospi decreased by 1.6pc, Hong Kong’s Hang Seng dropped 1.9pc while the Dow Jones Industrial Average plunged more than 600 points.

This all started with Trump’s angry tweet right after the Chinese announced more tariffs on $75 billion worth of US goods in which he asked all the US companies operating in China to set up their plants either in the US or in any other country. He also ordered UPS and Amazon to cancel all deliveries to China.

Finally, on Monday the 26th of August, the equities market saw some improvement when, a day earlier, Trump said that the Chinese authorities had contacted him for negotiations. He said that the Chinese are willing to solve the dispute through peaceful negotiations. He highlighted Chinese Vice-Premier Liu He’s comment that China wants a peaceful solution for this trade war.

After that the European markets started to show signs of improvement, the Dow Jones Industrial average improved by 190 points, S&P 500 gained 20.99 points, Nasdaq Composite improved by 70 points, while the MSCI all-country Word index Improved by 0.2pc.

Experts claim that there is still too much uncertainty between the two economic giants and that no one can predict the future. Stephen Innes, managing partner of Valour Markets in Singapore said that the best thing that Trump can do for market stability is to ‘keep quiet.’ Zhu Huani of Mizuho Bank in Singapore said that the risk of uncertainty paralysis the businesses and investors, hence slowing down the economy overall.

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