US threatens tariffs, slows yuan
US President Donald Trump says he will impose USD 200 billion tariffs effective from 1 January 2019, if the Chinese government does not make concessions at the upcoming G20 summit in Buenos Aires. Trump said another 10-25% of duties on the remaining USD 267 billion of Chinese imports could be implemented thereafter. USD/CNY today’s fixing lies at 6.9463, suggesting that the pair’s rise (currently: +0.11%) should be limited.
The G20 summit kicks off in three days: markets have not yet reacted much. Either investors have either gotten used to the rhetoric or they think that it is too early to draw conclusions. Both CNY and CNH remain stable, suggesting limited pressure for now. Further tariffs on Chinese goods should weigh on consumer goods, including computer or Apple products that require electronic components manufactured in China.
Asian shares slightly lower after Trump’s bluster
Asian equities slumped slightly following US President Donald Trump’s warning of new tariffs against China, a few days before he meets the Chinese president. The HK Hang Seng closing -0.17%, followed by Chinese blue chips CSI 300 -0.13% while Australian ASX 200, South Korean Kospi and Japanese Nikkei 225 bounced by +1%, +0.79% and +0.64%. European equities are marginally unchanged, as Italy’s bit of consent continues to support the market. The Euro Stoxx 50 is slightly higher (+0.08%), UK FTSE 100 is at +0.09%, French CAC 40 +0.05% and German DAX in neutral territory. Unfavourable economics in the EU (signalled by purchasing data published last Friday) should ultimately weigh on EU equities. The next key publication to monitor carefully will be November inflation, this Friday. Estimates are of a decline of to 2% in November from 2.20% in October.
