Wall St. sinks as Yuan slip sapped market optimism

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Wall St. sinks as Yuan slip sapped market optimism

On Monday, the 5th of August 2019, all major indexes of Wall St. posted a sweeping plunge after US President Donald Trump had warned Beijing on last Friday (August 2nd) that he had intents to hike tariffs further, which in effect had forced China to devalue its currency above 7-figure against its American counterpart to offset pressures of a 10 percent tariff hike on $300 billion worth of Chinese imports.

In fact, a devalued currency is widely-adored among export-oriented countries likes of China, Japan and South Korea, while it usually proffers an unfair advantage by allowing the exporters to purchase products at a much-cheaper cost, meanwhile delivering a boost to profit margins.

Aside from Trump’s threats to lift tariffs higher, US Treasury’s Mnuchin had designated China as a currency manipulator for the first time since 1994, while Chinese Commerce Ministry had imposed a stiffer sanction on US farm goods aimed at preventing its trading companies from sealing new contracts for US farm goods, both of which had sparked frets of further escalation of an already exasperated Sino-US trade abrasion.

Meanwhile adding that a stronger American dollar and a weaker Chinese Yuan were posing withering threats for US companies heavily exposed to Chinese export, an equity strategist at Jefferies in New York, Steven DeSanctis said, ““It’s the escalation of the trade war.

The dollar strengthening presents another issue. For companies that do a lot of business outside the U.S., it all adds up”. Citing statistics, on Monday’s (August 5th) market wrap-up, trade-sensitive Dow-Jones Industrial Average slashed 2.9 percent to 25,717.74, Standard & poor peeled off 2.98 percent to 2,844.74, while Nasdaq Composite shrugged off 3.47 percent to 7,726.04.