Global Markets relieved after US, China hint negotiations

According to latest reports form international media houses and agencies, China and United States have indicated today that they are willing to negotiate on escalating frictions. The announcement helped ease fears among the investors who were wary of this tit-for-tat dispute between the two global giants.

United States National Economic Council Director Larry Kudrow yesterday did his utmost to calm the markets after the two countries had engaged in a cyclical trade war hurling tariffs at each other. Mr. Kudrow also mentioned that both the parties still have time to negotiate and work out their differences.

China raised tariffs by around 25 percent on some of the key US exports such as at cars, soybeans, and aircrafts after US targeted China’s tech sector (conductors, batteries etc.). The taxes on this particular list of items was said to be the nuclear bomb of options in China’s arsenal while deciding products to impose taxes.

United States is world’s largest producer of soybeans, and China is by the far the biggest buyer of these beans.

The Chinese tariffs are a huge blow to American farmers, especially those in the Midwestern states where Trump needs to win the re-election in 2020. Soybean prices dropped more than 5.3 percent in the Chicago Mercantile Exchange; largest such drop since July, 2016. South American growers including Brazil and Argentina are main competitors of United States in soybean production and exports. The tariffs would help farmers in these two South American countries to increase their share of exports to China.

US Tech companies with factories in China, US Automakers including Tesla. General Motor Company and Ford Motor both manufacture automobiles in China.

China’s tariffs could hurt sales of some of Boeing Co.’s best-selling planes, such as the 737 family of passenger jets and put the company at a disadvantage to Airbus SE. China is a crucial market for Boeing.

The implications of this fighting between the two countries will also affect the South Korean economy. South Korean President Moon Jae-in said growing trade protectionism and trade conflict between the U.S. and China could hurt the Korean economy, and he urged the country to prepare. The nation sells huge volumes of parts and components that go into China’s final products.

Key Market Figures at 21:00 GMT

New York – Dow: UP 1.0 percent at 24,264.30 (close)

New York – S&P 500: UP 1.2 percent at 2,644.69 (close)

New York – NASDAQ: UP 1.5 percent at 7,042.11 (close)

London – FTSE 100: UP 0.1 percent at 7,034.01 (close)

Frankfurt – DAX 30: DOWN 0.4 percent at 11,957.90 (close)

Paris – CAC 40: DOWN 0.2 percent at 5,141.80 (close)

EURO STOXX 50: DOWN 0.2 percent at 3,340.19

Tokyo – Nikkei 225: UP 0.1 percent at 21,319.55 (close)

Hong Kong – Hang Seng: DOWN 2.2 percent at 29,518.69 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,131.84

Euro/dollar: UP at $1.2278 from $1.2270 at 2100 GMT Tuesday

Dollar/yen: UP at 106.82 yen from 106.61 

Pound/dollar: UP at $1.4080 from $1.4057

Posted on: 2018-04-05T09:59:00+05:00