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Markets Fall as Investors Await China Response to Trump Stocks Fall as China Responds to U.S. Tariffs
(about 3 hours later)
Global markets traded modestly lower on Monday as investors awaited word of how China would respond to President Trump’s escalation of a trade war. Stocks fell on Wall Street again on Monday, after Beijing said it would impose new levies on goods from the United States in response to tariffs imposed by the Trump administration on Chinese imports last week.
Chinese stocks finished more than 1 percent lower, while the rest of the region registered similar drops. European markets opened lower. Futures that track Wall Street’s performance indicated that stocks in the United States would open lower too. China’s finance ministry said that starting June 1, it would raise tariffs on a wide range of American goods to 20 or 25 percent from 10 percent.
China’s currency, the renminbi, weakened against the American dollar. [Read more about China’s response here.]
President Trump on Friday raised tariffs on $200 billion worth of Chinese-made goods. Talks between American and Chinese officials in Washington ended later that day with the two sides still far apart on a number of issues. Markets in the United States fell that day then recovered some ground on the hopes that the trade war could soon end without too much disruption. The S&P 500 fell more than 1.5 percent at the start of trading in New York, with an especially sharp tumble among semiconductor shares. Chip companies are particularly vulnerable to trade tensions with China, because they are dependent on production networks in Asia.
The timing of that end remains uncertain. China reiterated its defiant stance on Monday, as Geng Shuang, a spokesman for China’s Foreign Ministry, reiterated that Beijing would not bend to foreign pressure and a response would come. American officials on Monday were set to release details of their tariff plans, which could give China the information it needs to respond. The sell-off in the United States continued last week’s market weakness, when the S&P 500 dropped 2.2 percent in its worst weekly performance of the year. Stocks in Europe added to earlier losses in afternoon trade on Monday, with the CAC 40 index in France and the Dax in Germany down by more than 1 percent.
In China, the Shanghai Composite Index fell 1.2 percent, while the Shenzhen Composite Index fell 1.1 percent. Hong Kong markets were closed for a holiday. The recent turbulence has been notable for a stock market that soared in the first four months of the year, hitting a record high in April. The shift began after President Trump dashed hopes that a trade deal between the world’s two largest economies was near, instead threatening more action by the United States government and promising that his administration would take its time to reach a deal.
Japanese shares fell more modestly, with the Nikkei 225 index losing 0.7 percent. On Friday, Mr. Trump raised tariffs on $200 billion worth of Chinese-made goods. Talks between American and Chinese officials in Washington ended that day with the two sides still far apart on a number of issues.
In South Korea, the Kospi index fell 1.4 percent, while Taiwan’s Taiex index fell by a similar amount. [Read more about the last week’s stock market turbulence.]
Both the CAC 40 index in France and the Dax in Germany were 0.5 percent lower in early trading, while the FTSE 100 index in London was flat. In Asia, where trading ended before Beijing’s tariff announcement, the Shanghai Composite Index fell 1.2 percent, and the Shenzhen Composite Index fell 1.1 percent. In South Korea, the Kospi index fell 1.4 percent, Taiwan’s Taiex index fell by a similar amount and Japan’s Nikkei 225 index lost 0.7 percent.