On Monday, global stock markets dipped and the Chinese yuan fell sharply, just days after US President Donald Trump vowed to impose new tariffs on Chinese products in the latest trade war flare-up.
Europe’s stocks dived approximately 2%, mirroring heavy falls in Asia where Hong Kong tumbled nearly three per cent as it was hurt also by ongoing pro-democracy protests.
“European equity markets have been rocked by the rising trade tensions between the US and China,” said IG analyst David Madden.
“There is a feeling that China could inflict a lot more pain on the US in terms of the trade spat, and many traders are worried the economic conflict will rumble on for some time.”
Trump’s announcement late last week means virtually all of the $660 billion in annual merchandise trade between the world’s two biggest economies will be subject to punitive tariffs, with the latest duties to take effect September 1.
The news saw all three major Wall Street indices slump to their lowest levels since June, with the S&P 500 and Nasdaq recording their worst weekly losses of 2019 on Friday.
Yuan has reached its lowest level in China against the US dollar since August 2010, fueling speculation that Beijing is losing its currency to support exporters and counterbalance Trump’s latest threat to hit $300 billion in Chinese products with 10% tariffs, US leader regularly accuses the Chinese central bank of artificially weakening charges in yuan refused by Beijing.
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