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Wall Street hit hard by Trump's new trade sanctions

2019-08-01T21:03:28.771Z

Wall Street hit hard by Trump's new trade sanctions



New York (AFP)

Wall Street ended sharply in the red on Thursday, as indices subsided suddenly after the US president announced, unexpectedly, new trade sanctions against China.

Its flagship index, the Dow Jones Industrial Average, fell 1.05% to finish at 26,583.42 points and Nasdaq, with strong technological color, dropped 0.79% to finish at 8,111.13 points.

The broad index S & P 500 dropped 0.90% to 2,953.56 points.

Sign of investors' appetite for assets considered less risky, the interest rate on the US 10-year debt has plummeted to its lowest level since November 2016, just before the election of Donald Trump. It was changing at 20:20 GMT to 1.8946%, against 2.014% the day before.

The markets were taken aback when Donald Trump said on Twitter that the United States would introduce from September 1 tariffs of 10% on the 300 billion dollars of Chinese imports hitherto spared the trade war with Beijing.

Some companies specializing in the distribution of consumer goods have been badly affected, the seller of electronic products Best Buy plummeting for example by 10.79%, Macy's department store chain dropping by 6.69% and the Gap clothing salesman plunging of 7.90%.

"We did not see it coming," observes Gregori Volokhine of Meeschaert Financial Services who reads the ad twice.

"This is the usual process of negotiations, this is not the first time" that Donald Trump is launching threats to force China's hand in trade talks that have been going on for more than a year, says Volokhine .

But with his announcement, the president is also, according to him, "a snub to the Fed", which has certainly decided Wednesday to lower interest rates but not enough to taste Donald Trump.

"For the Fed to do what Trump wants, to adopt an extremely accommodating policy, the trade war should escalate," said Volokhine.

Washington already imposes additional tariffs of 25% on more than 250 billion dollars of Chinese goods. Beijing retorted by imposing additional tariffs in return on some 110 billion dollars.

Until then the US administration had spared consumer goods so that the US economy, driven by household consumption, remained relatively immune to trade war.

But "these 10% of additional tariffs will directly reach the American consumer", warns Gregori Volokhine.

Maris Ogg of Tower Bridge Advisors notes that "the threats have so far not really paid off because the Chinese seem to have a horizon much longer term than the Americans and will probably not want to bring a victory to Trump before the next presidential election. "

"All of this is fueling more uncertainty" around the trade war and its possible repercussions on global growth, she says.

© 2019 AFP

Source: france24

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