Brokers in the New York Stock Exchange. Photo credit: Richard Drew / AP / Profimedia
The American stock exchange lowered hard on Friday, after President Donald Trump threatened China with much higher commercial rates, accusing Beijing of becoming “very hostile” by the restrictions imposed on rare metal exports – essential resources for the technological and defense industry, CNBC reports.
The Dow Jones Industrial Average index lost 560 points (-1.2%), the S&P 500 index decreased by 1.7%, and the NASDAQ Composite index registered a 2.3%decline, reports News.ro citing CNBC. Before Trump's statements, the indications were growing, Nasdaq reaching even a new Tarday Historical Maximum.
“I had to meet with President XI in two weeks, at the APEC summit in South Korea, but now there is no reason to do it. We take into account a massive rates for Chinese products entering the United States,” Donald Trump wrote on his Social Truth network.
Donald Trump threatens China with “massive” growths of customs duties. The decision of Beijing that irritated the US President
Trump announces when Xi Jinping meets and what important topic will discuss: “Our farmers are affected because China no longer buy”
Beijing has recently announced additional control measures on the rare metal market, forcing foreign companies to obtain export licenses for any product containing over 0.1% of these strategic materials.
“The expectations for a new commercial agreement with China have completely disappeared,” said Jeff Kilburg, founder of KKM Financial.
The shares of the technological companies exhibited on the Chinese market led the decline: Nvidia lost over 2%, AMD over 5%, and Tesla more than 3%. At the same time, the price of American oil decreased against the background of the fears that the new rates could reduce the global demand.
“It is not surprising that technology is the most affected sector, given the high dependence on China both in production and as a market,” explained Art Hogan, chief strategist at B. Riley Wealth.
The Friday's decline deleted the weekly earnings of the S&P 500 index, which is now heading for over 1%, while Nasdaq and Dow Jones could end the week with decreases over 1%, respectively 2%.
In addition to commercial tensions, uncertainty is amplified by the budget block of the US government, already on the tenth day, without signs of progress in the negotiations between Republicans and Democrats. The administration has already started the temporary dismissals of the federal employees, announced the budget director Russell Vought.
“The relationships with the second economy of the world have become significantly more difficult. It is difficult to say how long it will be to return to the negotiation table – but it certainly doesn't seem to happen too soon,” Hogan warned.
China tightens the screw on the exports of rare, vital for the world industry
China responds to Trump with the same currency and imposes a special fee for American ships entering their ports
