A screen displays the Dow Jones Industrial Average after the closing at the New York Stock Exchange in New York, US, Aug 5, 2019. - Reuters: World stock markets plunged Monday as Beijing parried US President Donald Trump’s latest tariff announcements by moving to let the China yuan currency devalue and halting purchases of US agricultural products.
“There is a feeling that China could inflict a lot more pain on the US in terms of the trade spat, and many traders are worried the economic conflict will rumble on for some time,“ said IG analyst David Madden. China’s prior policy on the yuan had been to purchase foreign currencies, in part due to avoid triggering capital outflows but also as a signal to Trump, who has repeatedly complained about the strong dollar, said Louis Kujis, chief Asia economist at Oxford Economics.
Later, Chinese state media reported that Chinese firms have stopped buying US farm produce. China’s purchase decision means more pain for the US agricultural sector, which could hit the farm states that helped elect Trump in 2016.Chris Krueger, a Washington strategist at Cowen, an investment bank, said of China’s rebuttal, “on a scale of 1-10, it’s an 11,“ compared with other possible measures.
“Negotiations will continue to take place,“ said Alan Skrainka of Cornerstone Wealth Management. “What we’re seeing is hardball negotiations playing out in the public eye.”