China Stock Exchanges Rattled by Trade War

STOCK EXCHANGES – Stock exchanges in China were pummeled by the intensifying trade war between Washington and Beijing. However, losses were capped by comments from US President Donald Trump and by the reports of China’s state-backed stock purchases.

The Shanghai Composite and blue-chip CSI300 opened 1 percent lower, though they recovered some of their losses thanks to “national team” purchases, according to analysts.

An analyst said that there was “buying of key stocks” by state-backed players, remarking that “volume in morning trade is close to half of yesterday’s full session.”

Previously, Trump said that he was holding off slapping more taxes on the remaining $325 million worth of Chinese goods. He also said that he and Chinese counterpart Xi Jinping were scheduled to meet in June, spurring some hopes for an agreement that would end the tariff war.

Trump’s comments came after the Asian country announced higher tariffs on $60 billion worth of US goods, to be imposed on June 1, as a retaliatory response to the US’s decision last week to slap levies on $200 billion in Chinese imports.

“The implementation of the two tariffs is (almost) three weeks away from now, and the talks have not collapsed,” said another analyst. “People are also speculating whether China will roll out more policy support measures.”

In Other Markets

Meanwhile, other markets in the region were also affected by the ongoing trade dispute.

MSCI’s broadest index of Asia-Pacific shares ex-Japan was 1.1 percent lower, after dropping as much as 1.25 percent earlier, which was its lowest since January 30.

According to a Singapore-based economist, the volatility showed how a “180-degree turn” on trade negotiations had sent jitters to the market.

“We don’t see any quick end to this state of the market until we see some resolution, constructive dialogue and something very solid in terms of deals. But the hopes for that are a bit misplaced currently,” he said.

In the US, stock futures were lifted and were seen to be 0.4 percent higher, even though sentiment was still fragile.

During early European trades, the pan-European STOXX 50 futures were 0.3 percent higher at 3,296. In Germany, DAX futures rose 0.7 percent at 11,890.5. In London, FTSE futures climbed 0.14 percent at 7,140.

In the currency markets, the dollar rose 0.31 percent against the yen, trading at 109.64. Meanwhile, the euro was nearly 0.1 percent higher at $1.229. The dollar index, which measures the dollar’s strength against a basket of six other major peers, was largely unmoved at 97.311.