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US indices show a record drop since the beginning of the year

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US indices show a record drop since the beginning of the year
May 14
09:00 2019

In response to the US measures, the PRC has imposed increased duties on American products. Negotiations failed, causing the fall of the US indices early this week.

Dow Jones and S & P have shown the biggest drop since this January.  This year Nasdaq has experienced the sharpest drop.

The Chinese government has announced that it intends to raise duties on US exports (the total value of which is estimated at $ 60 billion) to 25%. Severe measures will enter into force as early as on June 1.

The 25% duties will apply to almost 2,500 items, including agricultural products. In addition, a 20% duty will be imposed on almost 1,100 items, including hard alcohol and chemical products.

The tariff for American CNG will increase from 10 to 25%, but crude oil will be imported at the same tariffs.

The last meeting of the parties was unsuccessful, so the contract was not signed. President Trump said that China was trying to disrupt the negotiations. At the same time Liu He stated that China couldn’t make concessions proposed by Washington.

Last Friday, increased duties on Chinese goods imported into America entered into force. The total value of products imported under new tariffs is $ 200 billion. The tariff was increased from 10 to 25%.

The US authorities say they are ready to impose the same duties on all the remaining Chinese export, which is estimated at $ 300 billion.

The response, which China described after May 10, was immediate and the mirror increase in tariffs will come into effect on June 1.

In social networks, Mr. Trump has published statements that the US has priority in this “tariff war,” since China supplies much more goods to America than America to China. At the same time, Larry Kudlow (White House economic adviser) noted that the both countries would suffer in that confrontation.

The fall in the US stock indices slowed down after Trump announced that he would meet with the Chinese leader Xi Jinping during the upcoming G20 forum. Also, the American President said that they hadn’t yet decided on raising duties on other Chinese goods.

An American company Apple is among the companies, which are the most sensitive to trade disputes between the two Powers. Its shares have fallen by almost 6%, AMD has lost 6.2%, while Intel has dropped by 3.1%.

Experts believe that large companies will continue to decline in the near future.

On Friday, Uber lost 7.5% during their first appearance on the stock exchange. On Monday, the fall continued, and the shares dropped by11%. The bid closed at around $ 41.6. The IPO price was $ 45.

At the time of closing on Monday, the Dow Jones dropped by 2.4% – to 25325 points. S & P 500 lost 2.4% – to 2812 p. and the Nasdaq – 3.1% to 7647 p.

 

The material was prepared with the participation of Katya Gordon,
a leading analyst of the brokerage company CT Trade

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