Tuesday, August 6, 2019

Panic Sets in as US-China Trade Spat Intensifies

On the road, so this will be a drive-by posting...

On Monday, stocks suffered their worst session of 2019 after China, without warning, devalued their currency, the yuan, in response to US demands for increased tariffs on imports.

President Trump announced that he would tack on a 10% tariff on a variety of Chinese goods - many of them consumer staples - on September first. The response from China was not entirely unexpected, though it took Wall Street and stock traders around the globe, mostly by surprise.

Intraday, the Dow was lower by more than 900 points, but rallied slightly into the close. It was still one of the worst days in recent memory for all US indices.

As Tuesday's trading approaches, US futures have turned positive as China pegged its currency at a higher level overnight, to everyone's relief.

While Monday's panic may appear to be a one-off, the trade war continues to roil markets on a regular basis. Until the two major trading partners agree to play nice and work out some kind of long-term deal, these kinds of shock events will continue to plague investors.

At the close, Monday, August 5, 2019:
Dow Jones Industrial Average: 25,717.74, -767.27 (-2.90%)
NASDAQ: 7,726.04, -278.03 (-3.47%)
S&P 500: 2,844.74, -87.31 (-2.98%)
NYSE Composite: 12,497.31, -342.20 (-2.67%)

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