Business Traders work on the floor of the New York Stock Exchange. (AP Photo/Richard Drew) 06 Aug 2019 05:01AM(Updated: 06 Aug 2019 05:10AM) Share this content
NEW YORK: Wall Street stocks plunged on Monday (Aug 5) after a forceful response by Beijing to the latest US tariff announcement escalated an ongoing trade war, exacerbating global growth worries.
The Dow Jones Industrial Average sank 767.27 points (2.90 per cent) to 25,717.74 in the worst session of the year.
The broad-based S&P 500 slumped 87.31 points (2.98 per cent) to 2,844.74, while the tech-rich Nasdaq Composite Index tumbled 278.03 points (3.47 per cent) to 7,726.04.
Stocks opened sharply lower after China’s currency tumbled below 7.0 against the dollar, seen as a retaliatory step after US President Donald Trump announced last week he would impose 10 per cent tariffs on US$300 billion in Chinese imports.
Stocks pushed lower following weak US services sector data and went lower still after 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.
Analysts offered a range of views on whether Monday’s moves by Beijing will lead to further tit-for-tat moves.
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.
The actions “seem designed for maximum political impact,” he said. “We expect a quick (and possibly intemperate) response from the White House and consequently expect a more rapid escalation of trade tensions.”
But other analysts noted has sometimes not gone ahead with such measures, alluding to reports that the latest tariff announcement