US President Donald Trump’s tweet threatening to hike tariff on Chinese imports has caused a bloodbath in global equity markets, including India.
Shanghai Stock Exchange’s SSE Composite Index closed a whopping 5.58% lower at 2,906.46, its worst loss since February 2016 when it had tanked 6.4% in intra-day day.
The smaller-cap Shenzhen Composite plunged 7.4% to 8,943.52, also the worst one-day percentage fall since February 2016.
On the other hand, Hong Kong’s Hang Seng Index, fell 2.9% to close back at the sub-30,000 level. The HSI closed at 29,210, down 872 points from Friday’s close.
The sudden hard-line approach by Trump spooked the investors. The US stock market futures sank, with Dow Jones Industrial Average futures, S&P 500 futures and Nasdaq Composite futures all falling around 2% by Sunday and into Monday.
Back home, Bombay Stock Exchange’s (BSE) 30-share Sensitive Index opened 244 points lower at 38,719.33, before sliding further down by 453 points in the early morning trade. However, during the day’s trade, Sensex recovered a bit and closed at 363 points lower at 38,600.
The overall market breadth was also heavily negative with 1,598 declines against 758 advances.
The Indian rupee also lost 18 paise against US dollar, despite correction in the crude oil prices indicating flow of foreign funds out of the Indian markets.
Analysts attributed the phenomenon to the Trump’s tweet, wherein he said that he would raise tariffs on $200 billion of Chinese goods from 10% to 25% this week, taking Chinese officials by surprise.
Despite Trump’s hard posturing, China’s foreign ministry said on Monday a Chinese delegation is preparing to go to United States for trade talks.
The US officials had indicated progress had been made at talks last week in Beijing, and said it was possible a deal could be reached by the end of this week.
“For 10 months, China has been paying Tariffs to the USA of 25% on $50 billion of High Tech, and 10% on $200 billion of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday,” Trump had said.