US, Chinese markets unruffled as Trump's trade war kicks off

It might be the trade war of the century, but US and Asian markets were not rattled by the formal start of the US-China trade war on Friday.

US indices rose today (see table below) as investors looked past President Trump's just-initiated trade war with China to positive employment data.

The Dow Jones Industrial Average rose 99.74 points, or 0.4%, to 24456.48. The S&P 500 added 23.21 points, or 0.8%, to 2759.82 and the Nasdaq Composite advanced 101.96 points, or 1.3%, to 7688.39.

The Shanghai and Hong Kong indices, and broader Asian markets, were also in the green.

Today's gains means Wall Street is in positive territory for the week, if still down for the calendar year.

For the week, the Dow industrials added 0.8%, while the S&P 500 notched a 1.5% gain and the Nasdaq posted a 2.4% advance, its biggest one-week rise since May.

However, some firms like to be hit by the trade war posted declines. Caterpillar and Boeing fell for the fourth week in a row.

Friday saw the Trump administration slap tariffs on a wide range of Chinese imports valued collectively at around $US34b a year. 

China immediately implemented retaliatory tariffs on US imports worth roughly the same amount per annum.

President Donald Trump has threatened to extend tariffs to $US200 billion of Chinese imports (the US imports around $US500 billion in goods from China each year). That would make it America's biggest trade war since the Smoot–Hawley Tariff Act of 1930, at the start of what's now known as the Great Depression.

 

RELATED VIDEO: Stephen Jacobi on why Trump's trade war is bad for NZ (April 22)


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7 Comments & Questions

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After 16 months of having Trump in office i am left wondering if any previous presidents were even trying.....what he has achieved in creating jobs is astounding.

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The US and Chinese economies are in rude health so tariffs will be passed on to consumers. Additional tax revenues for the Trump & Xi governments to pump into their favourite projects. All good.

Not so good is the North Korean situation. Looks like TRump has been played for sucker (he looked and sounded like one in Singapore) and that has a lot more geo-political and geo-economic ramifications. Hell hath no fury a Trump scorned and revealed to be what he is - a fool.

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You must be very upset over the tariffs on China, I feel sorry for you. Don't worry though, you'll get over it one day.

Hey, maybe China could manufacture something for their North Korean buddies to make up for the tariff losses. Oh that's right, the sanctions prevent them from doing that, & the North Koreans have no money to pay them anyway.

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Looks like everyone conveniently forgot over the 4th of July festivities that Chinese markets are in full on bear mode now, with a teetering nonfinancial debt to GDP lending of 260%+. Australia's total import/export market to and from China tops 25%, while NZ is around the 15% mark. All those cheering on Trump here might not be doing so in a short few months. When China sneezes, we get phlegm all over us!

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If US exports to China become too expensive due to tariffs China will seek those imports from other countries, yes?

Great opportunity for NZ to expand our export base.

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"When elephants tussle, the grass gets trampled"

No one is getting out of Trade Wars unscathed...

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I don't get Trumps reasoning with these tariffs. He must know it's going to cost Americans more for everything they buy. Maybe he's only thinking of the money the govt's going to take in, and doesn't care. he won't be popular for doing it, but then again he's used to that so what the hell.

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