Rising US-China Tension, A key risk for global equities.

US-China Tension

Let’s explore the reason for slid in  Stocks on US markets due to US-China Tension.

  • Tensions on both side has increased recently after both countries closed each other Consulates present in their respective countries.
  • Last Wednesday  US government closed China’s consulate at Houston.
  • Similar move is initiated by China with the closure of US consulate at Chengdu. 
  • After months of peace between two nations, the relationship is again getting worst. 
  • All three US indices tumbled first on the back high weekly unemployment claim & now on worsening US-China tension.
  • Asian markets are trading mix this morning. (7:42 A.M)
  • SGX Nifty is in green note this morning. (7:42 A.M.)

wall street

Why US markets slide on Friday? 

  • US stocks tumbled on the back of China’s order to for closure of US Consulate at Chengdu. This move can be seen as tit for tat when on Wednesday US took the similar move to close the China’s Consulate at Houston.
  • This will make things worst as already the relationship has already getting worst on Corona issue and now on these bilateral issues.
  • This is back to back fall of US stocks first on the rise of weekly claim of 1.42 million compared to 1.3 million claim earlier. 
  • In US, corona cases surged  to 4 million mark and constitute 1/4th of cases around the world is another negative for US stocks. Also there is surge in deaths resulted in dampening of investors sentiments.
  • Investors are hopeful that US government will follow a similar move like European Union economical package of 750 billion Euro to support their economy. 
  • After year of stability between US- China the relationship again took back seat, as US government planned to close the China’s consulate in Houston on back of protection of American intellectual property and American private information.

US Markets

  • Dow Jones Industrial Average fall by 182.44 points, or 0.68%, close at 26,469.89.
  • The S&P 500 tumbled by 20.03 points, or 0.62%, ends at 3,215.63.
  • Nasdaq Composite Index slide by 98.24 points, or 0.94%, close at 10,461.42.

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