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Global Markets Fall Hard, The Trade War Escalates, China Let’s Yuan Sink To Decade Low

Thomas Hughes

The U.S. Futures Are Down Sharply In Early Trading

The U.S. market is down sharply in early Monday trading after China raises the stakes in the trade war. Last week President Donald Trump broke the trade-truce by raising tariffs 10% on $300 billion worth of Chinese goods. The move came as a surprise and spurred retaliation from China. China has allowed its single currency the Yuan to fall to its lowest levels versus the dollar in over ten years. By lowering the value of the yuan China hopes to offset the impact of tariffs but opens a new set of problems. China has long been considered a currency manipulator and this move does not help that image.

The tech-heavy NASDAQ Composite is leading the market lower in the premarket session with a loss of -1.90%. The broad-market S&P 500 is close behind with a loss of -1.40% and the Dow Jones Industrial Average -1.30%. Global market bellwethers Caterpillar and Boeing are both down about -2.0%. The semiconductors are also showing weakness across the board. In earnings news, Tyson Foods reported better than expected EPS and maintained full-year guidance. Shares of the stock bucked today’s trend and gained more than 0.80% in early trading.

There is very little economic data on this week’s calendar. The only reports other than the jobless claims is JOLTs, PPI, and the ISM data due out today at 10 AM.

European Stocks Drop On Trade War Escalation

The European indices were broadly lower at midday on Monday after Trump and China escalated the trade war. The UK FTSE 100 is in the lead with a loss of -2.15% with the CAC and DAX close behind. Basic resources were among the hardest hit sectors and were down an average -2.6%. Shares of Richemont were at the bottom of the rankings after the luxury retailer reported weaker than expected results and provided poor guidance due to the Hong Kong protests.

Shares of HSBC were also moving lower. The bank reports its CEO is leaving unexpectedly, the board is not happy with the company’s double-digit growth. At the other end of the spectrum, Polymetal International advanced 1.9% on its results. On the economic front, regional PMI’s came in mixed across the EU. The general trend is weakness although there was unexpected strength in Italy.

The Yuan Falls To A New Low, Protests Bring Hong Kong To A Halt

Markets in Asia closed the Monday session broadly lower after the weekend’s trade developments and escalating tensions in Hong Kong. Over the weekend a general strike was announced that has brought the city to its knees. The strike is in response to an unfavorable extradition law that has still not been fully removed from China’s agenda. The Hang Seng led today’s rout with a loss of -2.85% while most others posted losses closer to -2.0%. The Korean Kospi fell -2.56% as tensions between South Korea and Japan remain at an impasse.

This article was originally posted on FX Empire