Published: Wed, May 15, 2019
Markets | By Otis Pena

Wall St shudders as trade war intensifies

Wall St shudders as trade war intensifies

USA futures pointed to opening drops of 1.2% for both the Dow Jones Industrial Average and the S&P 500.

Stocks plunged in trading Monday after China announced retaliatory tariffs on USA goods and as prospects for a deal to avert a trade war seemed more remote. The goods targeted include a broad range of agricultural products.

It was the first chance Asian markets had to react to the latest retaliatory measures from China.

"More importantly, our view remains the USA economy will slow sharply regardless, as the Fed's prior tightening of policy takes more of a toll". -China trade battle because many of their customers and suppliers are overseas.

As markets brace for China's "countermeasures" to the USA tariff hike, along with potentially more United States tariffs in the pipeline, trade-dependent Asian countries may have to brace for a further slowdown in exports, while becoming more reliant on domestic consumption to prop up growth momentum.

The MSCI Emerging Market Index decreased 0.3%, the lowest in 16 weeks.

The European market was led lower by the utilities and health-services sectors.

Tariff-sensitive Boeing Co declined 4.8 per cent and Caterpillar Inc fell 5.4 per cent, while the Philadelphia Chip index was down 4.9 per cent, adding to a 6 per cent decline last week.

"Volatility is going to persist".

"The market's realising that this was an absolute breakdown of (trade) talks and everything is gone backwards", said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

Mr. Higgins cited the previous inversion last month, when the three-month Treasury yield topped that of the 10-year, spooking markets.

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FILE PHOTO: The Bayer AG logo sits on display at the headquarters in La Garenne-Colombes, near Paris, France, May 13, 2019. It is the third case to go before a jury, according to the couple's lawyers.

The Russell 2000, which is comprised of smaller companies with less worldwide exposure, was up by 1.24 percent.

Trump warned Xi on Twitter that China "will be hurt very badly" if it doesn't agree to a trade deal.

Last week, the Trump administration raised tariffs from 10 to 25 percent on $200 billion worth of Chinese goods. The S&P 500 index was up 22.54 points at 2,834.41, while the Nasdaq composite was up 87.47 points at 7,734.49.

The S&P 500 posted 25 new 52-week highs and six new lows; the Nasdaq Composite recorded 51 new highs and 86 new lows.

"Given that equity markets are so far behind the curve in repricing the risk to the new-world reality, equities could be in for an extended period of pain", he said in a note. -China trade talks stumbled.

Those hopes are now being dashed and replaced by concerns that the trade war could crimp what is otherwise a mostly healthy economy.

Also Monday, Trump said he still was considering whether to go ahead with penalties on the additional $300 billion of Chinese goods.

Trump wrongfully suggested that the impact of the tariffs that took effect Friday could be mitigated by simply buying American-made products or those manufactured in countries not subject to the tax.

Uber Technologies shed 10.8 per cent in its second trading session after faltering Friday in a market debut and closing below its initial public offering price.

This article is for general information purposes only. You could lose all of your deposited funds. "Obviously, it may create some distortion in the market and this is what we want to avoid".

Though only a small margin, that's a marked change from the past year during which the index has lagged the USA market by 9%, as investors have anxious about Italy's bulging budget deficit, slowing economic and corporate growth and Britain's chaotic exit from the European Union. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He holds a BA in Economics from Rutgers University.

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