Stocks tumble as Trump threatens to hike tariffs on China
Stocks fell sharply at market open Monday as President Donald Trump announced higher tariffs on Chinese goods, escalating the ongoing trade fight between the world’s two largest economies and undermining expectations for a comprehensive agreement.To get more finance news
, you can visit shine news official website.
Via Twitter on Sunday, the president said that insufficient progress in bilateral talks would prompt him to hike duties on certain Chinese goods as early as Friday. Those tariffs were originally held in abeyance pending the outcome of trade talks.
The Dow Jones Industrial Average fell by more than 200 points, while the S&P 500 and Nasdaq were each also off by about 1% as of 11:15 a.m. ET. This extended declines from overnight trading, when contracts on the three major indices began their descent.
The president, a self-described “tariff man” who believes the trade imbalance can be whittled down with the use of import duties, explicitly linked U.S. growth to the imposition of Chinese tariffs.
....of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
— Donald J. Trump (@realDonaldTrump) May 5, 2019
Taken together, the announcement sent the Dow (^DJI), S&P (^GSPC) and Nasdaq (^IXIC) into a tailspin overnight, despite last week’s blowout employment data. The S&P 500 was up 17.5% for the year-to-date through Friday’s close.
The ratcheting up of trade tensions “likely [means] risk-off to start the week as China returns from the extended May Day holiday,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “In equities, this means downside risks.”
Indeed, traders fled to safe haven investments, with the Japanese yen higher against the U.S. dollar (USDJPY=X) Monday morning and gold prices (GC=F) on the ascent. U.S. Treasury yields, which move inversely to prices, fell across the curve, with the yield on the 10-year U.S. note, dropping 4.6 basis points, or 2.484% Monday morning.
Crude oil (CL=F) – considered a risk asset – tracked the drop in equities, with declines in the commodity’s prices exacerbated by news of a U.S. plan to deploy a carrier strike group and bomber task force to send a warning message to Iran.
The CBOE Volatility Index (^VIX), the so-called “fear gauge” looked to as a proxy for market risk, rose to as much as 18.8 Monday morning, the highest since the end of January.