The Effects Of Commercial War Could Return The Markets To Levels Of The 1970s

The Effects Of The Commercial War Could Return The Markets To Levels Of The 70s.

The growing tension unleashed in the world markets by the trade war that has already originated between the two main economies of the world has begun to have an effect on the most important indicators of Wall Street, such as the Dow Jones Industrial, which opened on Monday in Red and fell by 0.43% in a day marked by the suspension of the technology companies such as Google with Huawei, which weighs heavily on the Nasdaq and companies with a strong presence with China such as Apple.

Half an hour after starting operations, the Dow Jones lost 111.61 points and led the downward path of all Wall Street threatening that fears of a slowdown in the global economy begin to be a reality much earlier than economists have stipulated for end of the year. At the time of drafting the main reference of the global market listed in losses in relation to the day of this Monday, with 25715 points, -0.19%.

Although the index presents good levels this year close to its historical highs, the rift between China and the US could suggest the market shrinking ahead of time and lose the progress that has been shown this year in general not only the DJI, but also Nasdaq and S & P 500, the other benchmarks of Wall Street.

The New York Stock Exchange started this first week, marked by the situation of Huawei and the commercial and tariff pulse of the Administration of Donald Trump with China, the two colossi of the world economy that dominate more than a third of international trade.

The main US technology companies, including Google, will stop selling components and software to Chinese telecommunications giant Huawei, in response to the directive of President Donald Trump.

In the same sense, Alphabet, the Google company that supports supplies to China of computer hardware lost 2%, like Intel, Qualcomm, and Broadcom, after making the decision to cut the supply of components to Huawei until further notice.

The decisions of these companies were foreseen since last Wednesday President Trump declared a national emergency to prohibit US companies from doing business with companies that supposedly try to spy on the country or use the telecommunications equipment they manufacture.

In this context, in the Dow Jones group, the majority of corporates presented losses, led mainly by those with commercial and production relations with China, such as Apple (-3.81%), Nike (-1.55), Microsoft (-1.55%), Intel (-1.31%) and 3M Co (-1.19%).

For now, the strategy of the president of the United States is clear: a coalition of the most powerful economies to force China to change its way of doing business. But it is enough to see in a week what he has decided – Give a break to the allies to see if they will work with him to change the ways in which China does business. That is why the rates for cars have been postponed for six months. It is trying to persuade the Germans and Japanese to be tough on China at this time or face 25% tariffs on their exported vehicles if they do not. That's why we found out that tariffs on steel and aluminum are being raised in Canada and Mexico.

Now it is not known yet if the Chinese will capitulate and change in a way if they face a united front. But at a certain point, they run the risk of something that I think they never thought could happen: the president may want to turn the clock back to the regime completely if they do not retire.

Trump has made clear his intentions if he is reelected: ‘First America' and is willing to reverse if necessary the 48 years of US policy towards China. Until 1971 there was no contact between the two countries and in 1972, following the rapprochement there was a lot of business between them, which is what has led to the current point of a ‘commercial war' for interests that could be questioned, Chinese sales of more than $ 500 billion dollars to the United States that could disappear if a commercial agreement is not reached.

And Trump said this on May 19 in an interview with cana Fox News, that

“… he was happy and that China has lost more than 10 billion profits since the imposition of tariffs.”

Although it is likely that an extended trade dispute between the two economies will favor the United States, the final result would not be good for both parties and it is estimated that its main economic indicator, the Dow Jones, could be the one affected.

For now, the main indices of the world financial market are still in red and nervous investors so you can leave the beginning of the new cold war remastered between the two current giants of the global economy.

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