China Trade War Not Ending Soon

Devin Lawrence
November 1, 2018

Stocks took a tumble Monday with the Dow Jones Industrial Averageexperiencing a dramatic swing to close down almost 250 points amid concerns of another wave of Chines tariffs.

A person familiar with the USA administration's tariff deliberations told Reuters news agency there could soon be movement towards a new round of tariffs, adding that "the wheels are turning" in that direction. Australia's S&P-ASX 200 gained 1.3 percent to 5,805.10.

Citing a report from Citigroup economists, Bloomberg says that possible escalation of the trade war could hit consumers 10 times harder than earlier tariffs aimed mostly at industrial inputs and goods.

IBM saw its stock increase early Monday after news of its acquisition of cloud computing software company Red Hat for $34 billion, but it ultimately closed down 4 percent.

At 12 p.m. ET, the Toronto Stock Exchange's S&P/TSX composite index was up 49.17 points, or 0.34 per cent, at 14,771.08.

With the initial market reaction, Wall Street came under a heavy selling pressure and Nasdaq was last seen down 1.26% on the day while the DJIA and the S&P 500 indexes were losing 0.25% 0.05%, respectively.

The pan-European STOXX 600 index rose 0.01 percent.

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Boeing, which saw its stock gain early Monday, became the leading laggard on the Dow, closing down 6.6 percent and suffering its worst day since February 2016. Trump has also threatened to impose tariffs on the remaining goods imports from China, which previous year were worth $505 billion. "A trade war with China was one of the bigger overhangs". Italian bonds bucked a decline as the risk-on mood sent core European debt lower.

Brazil's Bovespa rose in morning trading after far-right politician Jair Bolsonaro was elected president, but it later ended down 2.2%. The Clinton administration made public a negotiating offer by the then Chinese Premier Zhu Rongji, which led to him being pilloried at home for offering too many concessions.

US crude fell 1.06 percent to $66.33 per barrel and Brent was last at $76.30, down 1.34 percent.

The yield on the 10-year Treasury note rose to 3.08 percent from 3.07 percent.The price of us crude oil dropped 0.8 percent to $67.04 per barrel in NY while Brent crude, used to price worldwide oils, lost 0.4 percent to $77.34 per barrel in London.Wholesale gasoline added 0.5 percent to $1.82 a gallon and heating oil slid 0.8 percent to $2.28 a gallon.

Gold fell 0.1 percent to $1,231.51 an ounce, the biggest fall in a week.

CURRENCIES: The dollar strengthened to 112.95 yen from 112.37 yen late Monday. The euro fell to $1.1390 from $1.1412.

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