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Asian Shares Mixed as US-China Trade War Continues

Asian stocks were mostly lower on Monday as the heating trade conflict between the US and China continued to put the equity market under pressure.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1 percent to $511.32, extending weakness from last week when it slipped 3.5 percent and marked its worst weekly performance since mid-March.

Japan’s Nikkei 225 gained 0.3 percent to ¥22,383.00 and South Korea’s KOSPI rose 0.3 percent to ₩2,288.66. The Nikkei started the day in the red, but quickly recovered after the Revised Cabinet office reported that growth in the world’s third-largest economy accelerated at its quickest rate since 2016.

Chinese shares stumbled, with the Shanghai Composite losing 1.2 percent to CN¥2,669.49 while the blue-chip CSI 300 index dropped 1.4 percent to CN¥3,230.07. Hong Kong’s Hang Seng declined 1.3 percent to HK$26.613.42.

Australia’s S&P/ASX 200 also experienced loss as the index shrunk 0.03 percent to A$6,141.70.

Market strategist Jingyi Pan stated that dark clouds continue to gather on markets with the latest threats regarding additional tariffs on Chinese goods dominating sentiment, making for a weak start of the week.

With any updates detailing the implementation based on US President Donald Trump’s suggestion, that would most certainly be negative for equity markets, one to watch in the week, Pan added.

An investment banking firm said the general sense is that the US will continue to escalate the pressure until China submits to US demands which does seem likely any time soon, and that the impact of tariffs and high levels of uncertainty will both continue to weigh on markets into the end of 2018.

Trump Warns Tariffs on Another $267 billion of Chinese Goods

Negativity in the Asian stock market continued after Trump stated on Friday that he was prepared to tax another $267 billion in Chinese goods if he wants, which would come on top of earlier plans to impose tariffs on $200 billion worth of Chinese imports.

The proposed duties would bring overall imports from China subject to tariffs to more than $500 billion, about the same as the $505 billion in products that the US imported from China in the previous year.

Trump’s announcement prompted a 100-point drop in the Dow Jones Industrial Average, with the evident intensification in the trade tensions with China. S&P 500 and tech-heavy Nasdaq Composite were also in the red on Friday.

China cautioned that it would resort to retaliatory actions if the US proceeds with the new measures.

The world’s biggest economies have already levied duties to $50 billion of each other’s products. Trump said on Wednesday the US was not ready to make a deal with China that they would like make, but added that trade negotiations would continue.

Companies have been waiting to see when the next round of $200 billion in tariffs would take effect, with many expecting an announcement on Friday.

The public had until Thursday to comment on the administration’s proposal. It was not confirmed whether the new tariff will be set at 10 percent or 25 percent.

FSMSmart Review

Monday, 10 Sep, 2018 / 10:39

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