Stock markets are pretty sensitive to a lot of things. The sentiments of investors drive markets. A healthy market shows that the investors have confidence in its value; therefore, an investor uses his money to buy stocks. A weak demand shows that the investors are selling off their shares because they no longer hold any confidence in the market. The trade-war between China and America is not making the situation any better for the stock markets. The Dow Jones Industrial Average concluded down by 618 points, or the fall can be calculated as 2.38 per cent. On the other hand, the S&P has dropped by 2.4 per cent.
The volatility of the market ensued because China has applied retaliatory tariffs on American imports. Since December, this can be concluded as the worst monthly losses. The companies with a greater dependence on China for the business were the ones to receive the significant hit in terms of economic volatility. The tech sector was also affected as Apple, United Technologies and Cisco are all somehow dependent, on Chinese production and labour.
According to one report, it has been estimated that around $1 trillion has been vanished from the global markets, just in one day. It is just the beginning of a trade war. Trump has imposed tariffs on China in a bid to promote the Amerian industry and to make China not pursue its ‘Made in China 2025’ vision. Trump wants to help a culture of America first by bolstering the economy of America. Therefore, he desires to end the trade deficit of America with China, and to do so, he has to cut off imports from China. Hence, he has been applying protectionist tariffs on Chinese goods. However, such moves would also affect the USA.
Talks in Washington, to end the trade-war, ended without any meaningful conclusion. Later, tariff from 10% in the past was incremented to 25% by the USA on the goods of worth $200 billion. Let’s hope that the world leaders conclude this trade war once the G20 summit in June takes place.