FxWirePro: Sino-American trade spat rattles market on Monday

Monday, May 6, 2019 5:03 AM UTC

Monday’s trading and liquidity are usually thin but not this Monday,

All the credit goes to President Donald Trump, whose weekend tweets cast serious doubts on the possibility of a trade agreement between the United States and China, which was supposed to get agreed this week during China’s vice premier Liu He’s visit to Washington.
President Trump tweeted, “For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars.... ....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!”
The shock came as many of President Trump’s aides, including economic advisor Larry Kudlow, w forecasting a deal to be agreed upon this week during Mr. Liu’s visit.

The financial markets have reacted to the tweets with increased volatility and risk aversion, as months of optimism came crashing down.

In response to President Trump’s twitter comments, China’s vice premier Liu He reportedly canceled his trip to Washington.

Equities:

Australia’s ASX200: -1.43 percent

Hong Kong’s Hang Seng: -3.4 percent

India’s nifty: -0.83 percent

China’s SSE composite: -5.2 percent

Japan’s Nikkei future: -2.3 percent

U.S. S&P500 future: -1.9 percent

Commodities:

Brent Crude: -2.2 percent

WTI Crude: -2.3 percent