Market Summary and increased tariffs between the US and Chinese economies

Maltese markets closed in the green on Friday with the MSE Equity Total Return Index moving 0.721% higher to 9,762.19. HSBC Bank Malta P.l.c’s jumped 3.45%, coming to a close of €1.50, followed by Bank of Valletta P.l.c’s gain of 1.85% and closing at €1.10. Meanwhile, MIDI P.l.c was the only equity to experience a downfall of 1.49%, seeing it close at €0.66.

US markets closed sharply lower, after President Trump told American companies to begin searching for ‘’an alternative to China’’.  The Dow Jones Industrial Average shed 2.37%, or 623.34 points, as did the S&P500 closing 2.59% or, 75.84 points, lower. The Nasdaq Composite Index fell by 239.62 points, or a loss of 3%.

European markets also ended the week on a down note due to the trade war heating up again. The pan-European STOXX600 weakened by 0.78% or, 2.93 points, whilst the London FTSE100 index closed 0.47% or, 33.20 points lower.

Trump loads an additional 5% tariff on Chinese goods

Trump escalated trade tensions between the two largest economies by loading an additional 5% duty on $550 billion Chinese goods. The tariffs would increase to 30%, from the existing 25%, on the 1st of October. This news was announced after markets had already closed on Friday, thus leaving more potential damage for next week.

Additionally, Trump is also planning on increasing tariffs to 15% on remaining Chinese goods summing up to $300 billion. The tax on some products will be affected as from 1st September, whilst on other products, tariffs have been delayed until the 15th of December.

Trump’s motive to increase tariffs came about as ‘’past administration have allowed China to get so far ahead of Fair and Balanced trade that is has become a great burden to the American Taxpayer’’. As a President, he thinks that increasing tariffs is the only way forward. 

American business groups reacted furiously to the news, with David French, senior vice president for the National Retail Federation, citing that ‘’it is impossible for businesses to plan for the future in this type of environment’’. Further updates will come out after the G-7 summit happening at present.

This article was issued by Peter Petrov, Junior Trader at Calamatta Cuschieri. For more information visit, https://cc.com.mt/. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.