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China and the U.S. escalated trade rhetoric again, but markets didn’t mind. Tesla is facing a U.S. criminal probe. And Asian central bank decisions are on tap. Here are some of the things people in markets are talking about.
China Hits Back
China announced it will take retaliatory tariff action against $60 billion of U.S. goods, sharply escalating their trade conflict as the Trump administration considers imposing duties on almost all Chinese imports. China’s retaliatory tariffs, on items ranging from meat to wheat to textiles, will take effect on Sept. 24, China’s Ministry of Finance said in a statement. Beijing is still ready to negotiate an end to the trade tensions with the U.S., the ministry said. At almost the same time Beijing released its list of counter-tariff targets, U.S. President Donald Trump on Tuesday threatened more punitive measures against China if it targets politically potent U.S. agricultural products for retaliation. “China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me,” Trump said on Twitter. “What China does not understand is that these people are great patriots.”
Markets Shake It Off
Global equity markets rose, shrugging off the latest salvos in the intensifying trade war between the U.S. and China. Treasuries retreated and oil rose. The S&P 500 Index registered its biggest intraday gain in three weeks. Technology stocks, which got hammered in Monday’s session, led the equity benchmark higher. Asia equities recovered from early weakness after the U.S. tariff announcement, with benchmarks in Japan and Shanghai jumping. The Stoxx Europe 600 Index also bounced back from a brief swoon following China’s response. “It looks like the president has decided to increase pressure on China. The market was expecting a 25 percent rate but the fact that it’s 10 percent might mean it’s a little bit less of a threat than we thought,” Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said by phone. He added that the Chinese showed “restraint” by not copying the White House’s levies on $200 billion in goods. “They’re not matching the U.S. dollar-for-dollar,” he said.
DOJ Probes Musk Tweet
Tesla Inc. is under investigation by the Justice Department over public statements made by the company and Chief Executive Officer Elon Musk, according to two people familiar with the matter. The criminal probe is running alongside a previously reported civil inquiry by securities regulators. Federal prosecutors opened a fraud investigation after Musk tweeted last month that he was contemplating taking Tesla private and had “funding secured” for the deal, said the people, who were granted anonymity to discuss a confidential criminal probe. The electric carmaker’s shares are down more than 20% since the infamous tweet. That’s even after Audi unveiled a Tesla competitor that failed to impress analysts.
Ma Issues Grave Trade Warning
Billionaire Jack Ma sent out a grave warning regarding the trade war between the U.S. and China: It’s going to last longer and have a bigger impact than most people think. China’s richest man said the dispute could last 20 years and persist beyond the Trump presidency, as the world’s two strongest economic powers battle for global supremacy. China needs to strengthen its economy to deal with the conflict and shift trade relations from the U.S. to regions like Southeast Asia and Africa, the chairman of Alibaba Group Holding Ltd. said during a speech at the company’s investor day conference in Hangzhou. “Short term, business communities in China, U.S., Europe will all be in trouble,” Ma said, pacing a stage in an open white dress shirt and punctuating his remarks with forceful jabs.
Coming Up ...
Two Asian central bank decisions are on tap Wednesday. The BOJ is expected to refrain from fresh action after a series of policy tweaks at the last meeting. The Bank of Thailand, meanwhile, is considering shifting to a tightening bias while holding rates steady. Investors will also be watching day two of the summit between South Korean President Moon Jae-in and North Korea’s Kim Jong Un. The two are expected to hold a second closed-door meeting on Wednesday morning, followed by a joint press conference.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- China’s bullet trains are coming for Hong Kong’s airlines.
- Gold is sticking around $1,200 even as investors flee bullion ETFs.
- China’s grip on rare earths may have proved too tight for Trump.
- Trump’s sanctions on Iran are crippling its oil exports.
- A $1 billion bet on home flipping.
- Women in Silicon Valley have half the options men have.
- Ferrari unveiled the closest thing to a Formula 1 racer ever sold to the public.
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