Headline indices of the Mainland China equity market rebounded on Thursday, 12 July 2018, as investors chased for bottom fishing on battered stocks after benchmark indices sinking more than 20 percent from this year's high amid concern its economy will struggle to cope with both deleveraging and a trade war. The rebound was also supported by buying by some foreign funds, pointing to historically cheap valuations. At the close, the benchmark Shanghai Composite Index bounced 2.16%, or 59.89 points, to 2,837.66, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 2.74%, or 42.55 points, to 1,597.17. The blue-chip CSI300 index added 2.16%, or 73.53 points, to 3,481.06.
The Chinese and U. S. officials have raised the prospect of resuming talks over trade between the two nations after President Donald Trump ratcheted up the pressure by announcing a huge new round of potential tariffs. Washington and Beijing now have about seven weeks to strike a deal or dig in for a trade war that could upend corporate supply chains and raise prices for consumers around the world.
Local market suffered heavy losses yesterday after the Trump administration raised the stakes in its trade war with China on Tuesday, saying it would slap 10% tariffs on an extra $200 billion worth of Chinese imports. U. S. officials released a list of thousands of Chinese imports the administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminum.
It also includes consumer goods ranging from car tires, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products.
China's government said it will take firm and forceful measures if the new tariffs are enacted. That response probably would include measures other than tariffs. Trump has threatened to put new taxes on almost everything the United States imports from China.
The U. S. tariffs on $200 billion of Chinese goods are scheduled to take effect after Aug. 30, when the Trump administration's consultation process ends.
Last week, Washington imposed 25% tariffs on $34 billion of Chinese imports, drawing immediate retaliatory duties from Beijing on US imports in the first shots of a heated trade war. US President Donald Trump had warned then that his country may ultimately impose tariffs on more than $500 billion worth of Chinese imports.
CURRENCY NEWS: The Chinese yuan was down against the dollar on Thursday, July 12, 2018, due to the People's Bank of China softer mid-point rate fixing. The People's Bank of China (PBOC) set its official daily fixing at 6.6726 per dollar, its weakest level since August 18, 2017. The onshore yuan opened at 6.7 per dollar and was changing hands at 6.6984 as of 0331 GMT. It had earlier breached the key 6.7 to the dollar level to touch 6.7051.
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