By CCN.com: US stock markets are closed for Labor Day but the futures market paints a gloomy picture as we move into September. Dow Jones Industrial Average (DJIA) futures trickled lower on Monday, extending the August stock market massacre which saw 2 percent wiped off the Dow.
The early September slide came after Trump’s new wave of China tariffs went into effect on Sunday. China immediately retaliated with fresh tariffs of their own.
Dow Jones Industrial Average (DJIA) futures fell 80 points before recovering slightly on Monday. The move was accompanied by low volumes as traders take a break for Labor Day.
On Sunday, Trump imposed a new 15 percent tariff on $110 billion of Chinese goods. This wave includes footwear, clothes, and electronic products like the Apple Watch.
A further wave of $160 billion on goods like laptops and cellphones, has been delayed until December in the hope of avoiding a holiday gift crisis. The latest round of tariffs, which focuses on consumer goods, is expected to have a direct effect on prices.
China hit back instantaneously with new 5-10 percent tariffs on US agriculture products. So much for the trade war detente.
Monday’s slide shows little change in investor sentiment after a crushing August on the stock market. Global equity markets shed $3 trillion in August with the Dow Jones Industrial Average dropping 2 percent on the month.
The selloff was triggered by the inversion of the US Treasury bond yield curve, a classic and reliable recession indicator.
Wall Street giant UBS warned that a recession was increasingly likely on the back of trade war uncertainty, and prompted investors to purge their portfolio of stocks.
“[Trade war escalations] justifies a reduction in risk in our portfolios in order to lower our exposure to an uncertain political environment.”
The only light at the end of the tunnel for investors is a loosely-promised meeting between the US and China scheduled this month.
Speaking from the White House, Trump said the meeting was still on the calendar, but warned that he wouldn’t back down easily.
“We can’t allow China to rip us off anymore as a country.”
Last modified: June 23, 2020 2:34 PM UTC