This Tuesday morning, stocks within Asian markets have dipped a bit partly due to the threat of United States President Donald Trump threatening to increase tariffs on the country. On top of this, China is combatting this by dropping agricultural purchases within its competitor. The tariff should come into place on September 1st.
In Japan, however, the Nikkei 225 fell a decent 2.61%, with Fanuc, an index fund and robot building company falling 3.69%. The Topix index fell around 2.4% as well, reports the publication.
Kospi, a South Korean space, fell 1.6%, too, with SK Hynix falling 2.92% and Australia’s S&P/ASX200 dropping 2.48%.
Of course, Wall Street is also seeing day trading stock drops for the same reasons. According to CNBC, the Dow Jones Industrial Average has fallen over 700 points, and the S&P 500 fell 3% with the Nasdaq Composite dropping 3.5%. The publication states that this is the worst drop of 2019 for these companies so far.
A Deeper Look
Essentially, the Ministry of Commerce in China claims that companies within the country will no longer buy agricultural products from America due to Trump’s claim. On top of this, the group will “not rule out” adding export tariffs on United States products that will be purchased after August 3rd.
The publication claims that on top of this, investors are looking for what may happen with the Chinese yuan which recently fell due to this same reason.
As you may know, the central bank of the country establishes a rate for its currency every day. This ensures that the asset can trade with 2% of its middle value against the U.S. dollar, which they also call the “onshore yuan,” used by forex brokers, investors, and banks.
The (midpoint) fix is likely to be below 7.0900″ says Richard Grace, the chief currency strategist and head of international economics and the Commonwealth Bank of Australia. When last checked, the offshore yuan was around 7.1268 against the greenback, reports the publication.