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Stocks – China's Currency Tumble Batters U.S. and Global Stocks

Stock MarketsAug 05, 2019 04:14PM ET
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© Reuters.

Investing.com - Stocks were suffering their worst one-day losses since February 2018 on Monday after China allowed the yuan to sink in apparent retaliation against U.S. threats to impose new tariffs on Chinese goods imported into the United States.

The S&P 500 and Dow Jones industrials each tumbled 3.2%. The Nasdaq Composite plunged nearly 4%. Markets around the world also slumped as the trade war flared up again.

The yuan USD/CNY was allowed to weaken to more than 7 yuan per dollar, a level not seen in at least 10 years The effect is to make Chinese goods cheaper against U.S. goods and dampen U.S. exports to China.

The Trump Administration and China's government have been waging a furious game of tariffs and counter-tariffs as Trump seeks to rebalance the trade relationship between the countries. After a meeting between Chinese and U.S. officials last week didn't go well, Trump ordered the tariffs boosted.

China, aggressively asserting a leadership role in global trade matters, has said it won't be bullied.

All 30 Dow stocks were lower, with Apple (NASDAQ:AAPL) the worst performer, down more than 5.4%. The plunge subtracted 75 points from the Dow. Losses in Visa (NYSE:V) and Goldman Sachs (NYSE:GS) subtracted a combined 120 points from the Dow, which was off 960 points at 3:20 PM ET (19:20 GMT).

Among the few gainers Monday were gun makers and Tyson Foods (NYSE:TSN). Gun stocks rose in the belief that gun regulations imposed after the El Paso and Dayton shootings would boost firearms sales.

Interest rates also fell around the world. The 10-year Treasury yield fell to 1.728% from Friday's 1.855%. All of Germany's sovereign debt is yielding negative returns for the first time.

Rates have been falling as global business and leaders worry about economic slowdowns. HSBC (NYSE:HSBC) ousted its CEO and said it would be cutting some 4,000 jobs over the next year.

In addition, crude oil prices fell, with Brent futures, the global benchmark, down $1.94 to $59.97 a barrel. West Texas Intermediate crude was down $1.87 or 3% to $60.

Stocks – China's Currency Tumble Batters U.S. and Global Stocks
 

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Comments (9)
Max German
MaxiGE Aug 05, 2019 4:23PM ET
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and retail traders sell the stocks in panic typical buy the discount
Hank Williams
Hank Williams Aug 05, 2019 3:41PM ET
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Stock market isn't really worried. They just did today for the headlines. When it's real you don't have short covering at the end of the day.
Dong Chang
Dong Chang Aug 05, 2019 3:22PM ET
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When China lower or manipulate their currency, they put big dent on their foreign reserve,  it causes the housing bubble to burst in a faster pace,  it makes many people flee away the CNY/RMB if keeps devalue.  Remember other neighbor countries can also lower their currency to off set the competitions like Vietnam, Cambodia, Bangladesh, Indonesia etc...No matter what there will be more factories leaving China because companies try to stay away from this U.S. - China trade war.
Bowen Li
Bowen Li Aug 05, 2019 3:22PM ET
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China has rigid capital flow regulation, your thought is from free market economics; even the housing market in China is regulated by local government.
Paul Manefee
Paul Manefee Aug 05, 2019 3:22PM ET
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Haha, you’re right, China CCP can label you as a national security threat and charge you with the “crime” selling your stock against “people’s interest” LOL
Johannes Stevens
Johannes Stevens Aug 05, 2019 2:55PM ET
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their's opportunity to prosper in these events, wait and see...
King Power
King Power Aug 05, 2019 2:47PM ET
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Emil and Andrew taking the juice. It's all planned.. Wait for the big one, I bet those guys are going to be selling lol XD
Andrew Garrison
Andrew Garrison Aug 05, 2019 2:29PM ET
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Think this will have been one tweet too far
Hank Williams
Hank Williams Aug 05, 2019 2:13PM ET
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Yeah the China deal will be quick. It will be a great deal. What a joke.
Richard Gustitis
Richard Gustitis Aug 05, 2019 2:06PM ET
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the President has accomplished in his tenure, introduced tariffs, deregulated big business, and cut taxes that have already been cut during the Reagan era
Zen Cat
LittleZenCat Aug 05, 2019 1:52PM ET
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He had one job.... <insert meme here>
Vishal Bhosekar
Vishal Bhosekar Aug 05, 2019 1:52PM ET
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To help short sellers...
Al Vlaj
alvlaj Aug 05, 2019 1:52PM ET
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Strengthen Russia
Tl Smiles
Tl Smiles Aug 05, 2019 1:52PM ET
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Buy stocks for cheap
Steve Swisher
Swish Aug 05, 2019 1:52PM ET
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Renegotiate tariffs with CHINA.  Get it done!
Steve Swisher
Swish Aug 05, 2019 1:52PM ET
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And get a win-win deal ......
 
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