Most of the world markets fell sharply yesterday as fears of an open trade war between the world's two largest economic powers.
Most of the world markets fell sharply yesterday as fears of an open trade war between the world's two largest economic powers.

Trump tweet.. disturbs global markets at the beginning of the week

Sharp falls in stock exchanges, yuan is the most affected.. and the reason is Trump tweet.

The global markets lost millions of dollars as they opened yesterday, with markets falling sharply on Monday, with the sharpest decline in Asia as concerns about trade escalated following US President Donald Trump's sudden announcement that he would impose strict tariffs on $200bn of imported Chinese products during the week, raising concerns again about a global slowdown and ending a period of relative calm in the global markets.

Trump's Tweet

On Sunday, Trump stepped up the trade war by announcing a surprise increase in tariffs from 10% to 25% on Chinese products worth $200bn a year.

US stocks opened sharply lower yesterday; DJI was down by 344.33 points, equals to 1.30 % at 26160.62, SPX was down by 36.75 points, equals to 1.25%, at 2,908.89, and IXIC Index fell by 182.15 points, equals to 2.23%, to 7,881.85.

The Asian markets were severely hurt, all of which closed down sharply. The shock was echoed in Europe, where a sharp drop was recorded before noon, although it did not reach the level of decline in Asia.

In China, the SSEC in Shanghai Stock Exchange lost 5.58% to 2,906.46points, and SZSE Component Index fell7.38% to 1,515.80 points as well as SEHK declined 2.9% at closing.

In Europe, STOXX Europe 600 index of European shares lost 1.2% by 07:20GMT, marking the biggest drop in six weeks and SXAP fell 3%, leading to a widedecline among different sectors in Europe.

At 09:19 GMT, the Frankfurt Stock Exchange was down by 2.09% at 12,154points, while the Paris Stock Exchange fell 2.06% to 5,428.98 points. The MilanStock Exchange shed 2.19%, while the Zurich Stock Exchange index fell 1.82% to9564.35 points.

In London, markets were closed on a holiday. Investors' expectations werehigh as China-US trade negotiations drew to a close, amid expectations of anagreement by the end of the month. The prospect of an agreement between Chinaand the United States was one of the reasons for the strong rally this year.Stock indexes in most countries recovered after heavy losses last year to hittheir highest levels in several months.

"Donald Trump has tightened pressure on China in the last phase of thenegotiations, and it may be a trick to extract concessions, but it is adouble-edged sword because this strategy is likely to upset Beijing." saidTangi Le Libo, a strategist expert at Aurel BGC Brokerage.

China announced on Monday that it was still planning to send tradenegotiators to the United States despite Trump's decision. In thecurrency markets, the Chinese yuan headed to its biggest decline in ten monthsyesterday, after the threat of Trump, while currencies, such as the yen, jumpedin risk aversion.

"This could lead to a global risk aversion, especially after the recentcalm in the markets," said Ulrich Leuchtmann, the head of foreign exchange strategyat Commerzbank AG, research division.

China's currency led the losers withits descent by about a percentage point, approaching its lowest levelthis year at about 6.80 per dollar. The Mexican peso and the Turkish lira fellmore than half a percentage point each. Other currencies that are bound by theChinese economy have fallen, such as the Australian and New Zealand dollars,which have fallen between 0.3% and 0.5%.

Apart from weakness in the yuan and other emerging market currencies suchas the Turkish lira, the dollar steadied sharply against a basket ofcurrencies.

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