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The start of the trade war between the US and China intensified last Thursday when US President Donald Trump announced a 10% tariff on Chinese imports, worth US $ 300. billion US dollars, starting in early September. May exceed 25%. This decision resulted in a sharp drop in US stocks, as oil prices fell by more than 6% on the same day.
Chinese answer
China has asked its partners and major companies to stop importing agricultural products from the United States in response to the US decision to impose tariffs on Chinese products.
The central bank of China cut the reference price of the Chinese currency, the yuan, and fell against the dollar to more than 7 yuan, which is the lowest level in almost 10 years. Trump described this as a major violation on the part of China and a currency war.
Although the People's Bank of China (PBOC) denied the devaluation of the yuan to counter US tariffs and confirmed that the movement of the Chinese currency was determined by the market, its determination of the local currency range to 6.9225 yuan for one dollar has caused the yuan to fall to its lowest level against the dollar for more than ten years.
Rising tensions on Monday caused a liquidation of US and European stock markets and high volatility in commodities and energy markets.
The dollar deepens its losses
The US dollar extended losses against major currencies to a two-week low on Monday, as the trade war intensified and markets and investors anticipated further declines in US interest rates. .
The US central bank lowered interest rates for the first time in 10 years.
In the face of renewed trade tensions, investors speculated that the US Federal Reserve would take other measures to reduce interest rates, putting additional pressure on the green card.
Strong sales wave
US stocks widened their losses on Monday, the Dow losing more than 800 points and most indices fell more than 3%, completing the fall that began last weekend.
Analysts predict that the application of tariffs and new tariffs to China of 10% for more than five months "will maintain global growth at a low level of the order of 2.8% to 3 % ", warning that the global recession will occur when" the slowdown in global economic growth will be less than 2.5% "He said.
Oil prices are falling
At the same time, oil prices fell on Monday, unaffected by geopolitical tensions in the Strait of Hormuz, as escalating trade war between the United States and China could result in a slower growth in oil demand from the world's largest consumers. Brent lost $ 60 a barrel Monday, down more than 3%, and US crude fell 2% to trade below $ 55 a barrel.
The price of gold climbs
Gold was the biggest gain on Monday, reaching $ 1,469 an ounce, up 2% from Friday's close, its highest level since May 2013, boosted by gains from the last week following the fall of global equities. Persistent concerns over the global economic slowdown have heightened investor appetite for safe haven badets, as prices have also been buoyed by the weaker US dollar and the increased purchase of yellow metal by global central banks. during the first half of this year.
*financial badyst
Kingdom
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