China Market bounces despite latest U.S. tariff move

The Mainland China equity market recouped early losses to finish session higher on Tuesday, 18 September 2018, with investors seeking out issues that have been oversold recently. However, market gains were capped on fears of escalation in trade tensions between the U.S. and China escalated after U.S. President Donald Trump imposed 10% tariffs on about $200 billion worth of Chinese imports, while China has pledged to retaliate to any new tariffs imposed by the U.S. At closing bell, the benchmark Shanghai Composite Index gained 1.82%, or 48.16 points, to 2,699.95, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 1.38%, or 23.17 points, to 1,404.15. The blue-chip CSI300 index added 2.01%, or 64.51 points, to 3,269.43.

The administration of U.S. President Donald Trump on Monday announced a 10% tariff on another batch of $200 billion of Chinese imports, bringing the trade war between the world's two largest economies to a new level. The long-threatened new tariffs will take effect Sept. 24 and will be raised to 25% at the beginning of 2019, according to a statement published by the White House.

 

Shares of infrastructure stocks advanced on speculation that Beijing will step up investment in roads and bridges to offset the impact of the latest tariff salvo from Trump.

CURRENCY NEWS: China's yuan fell against the U.S. dollar on Tuesday, after softer mid-point fixing by People Bank of China and as U.S. president Donald Trump on Monday imposed 10% tariffs on about $200 billion worth of Chinese imports, and threatened to levy duties on an additional $267 billion of Chinese goods if Beijing retaliates. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.8554 per dollar, 45 pips weaker than the previous fix 6.8509. The spot market opened at 6.8760 per dollar and was changing hands at 6.8639 at later afternoon, 86 pips weaker than the previous late session close. The offshore yuan was trading at 6.872 per dollar.

OFFSHORE MARKET NEWS, US stock market closed down on Monday. The Dow Jones Industrial Average fell 92.55 points or 0.4% to 26,062.12, the Nasdaq plunged 114.25 points or 1.4% to 7,895.79 and the S&P 500 slid 16.18 points or 0.6% to 2,888.80.

The major European markets also closed down on Monday. The French CAC 40 Index and the German DAX Index edged down by 0.1% and 0.2%, respectively, while the U.K.'s FTSE 100 Index closed just below the unchanged line.

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