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Sino-US Trade War Heats Up US Stock Market Hit Its Biggest One-day Drop In The Year

Date:Aug 08, 2019

On August 5th, the US stock market plunged again, this time still related to the Sino-US trade war. US President Trump’s previous threat to impose tariffs on China’s exports to the United States has triggered China’s counter-measures, which has intensified investor concerns that trade disputes with the world’s two largest economies will intensify, and the US stock market has suffered severe selling. .


Trade war


Xinhua News Agency reported in the early morning of August 6 that due to the US announced that it intends to impose a 10% tariff on US$300 billion in Chinese exports to the United States, it is a serious violation of the consensus between the heads of state of the two countries in Osaka, and the State Administration of Customs Tariff Commission will deal with new deals after August 3. The purchase of US agricultural products does not exclude import tariffs, and Chinese related companies have suspended purchasing US agricultural products.


The US stock market has been chilling, and China’s tough counter-measures have been introduced, which has caused further blows. At the close, the Dow Jones index plunged 767.27 points to 2,517.74 points, a decrease of 2.9%, and once fell to 961.63 points. The Standard & Poor's 500 index fell nearly 3% to 2844.74 points. The Nasdaq Composite Index fell 3.5% to close at 7726.04 points. The three major indices all hit the biggest one-day drop in the year. The Standard & Poor's 500 Index is currently down more than 6% from the all-time high recorded last month.


The Chicago Board Options Exchange Volatility Index (VIX) jumped 36% to more than 23 points. The index is a key indicator of investors' sentiment towards the stock market. The soaring index means that investors are worried.


The Nasdaq index fell for the sixth consecutive trading day, the longest consecutive decline since the end of 2016. The Standard & Poor's 500 Index also fell for six consecutive days. The Dow Jones Industrial Average fell for the fifth consecutive day. Last week, US President Trump ordered a new tariff on the rest of China's goods, and the Federal Reserve failed to signal that it would actively support the economic slowdown as the market hoped.


Apple led the US stock market, the company's share price fell 5.2%. The SPDR S&P Retail ETF (XRT) closed down 2.2% as new tariffs would hit apparel, electronics and toys. Nike fell by 2.7%. Macy's and Best Buy contracted by 3.1% and 3.5%, respectively.


Peter Boockvar, chief investment officer of Bleakley Advisory Group, said, “Now our trade situation is deviating from the track, as the side effects of increased tariff use have multiplied, and we are far from reaching any solution with China. The United States wants to use tariffs as a tool to resolve legitimate disputes between us and China. This policy has suffered a fiasco."