Asian Markets Rebound Amid Fears of Trade War and Government Shutdown
[HONG KONG] Asian investors fought to grind out gains at the end of a painful week for markets, welcoming signs that US lawmakers will avert a government shutdown, but remaining fearful over Donald Trump’s trade war.
Trade War Fears Continue to Weigh on Markets
Equities have been pummelled in recent weeks, and gold pushed to a record high, as concerns about a US recession have grown due to the president’s tariffs on trading partners and billionaire ally Elon Musk’s job cuts.
Trump Threatens Tariffs on European Wine and Alcoholic Beverages
In the latest salvo, Trump threatened to impose 200 per cent tariffs on wine, champagne, and other alcoholic beverages from European Union countries in retaliation against the bloc’s planned levies on American-made whiskey. The European measures, including a 50 per cent tariff on American whiskey, were in response to the White House’s levies on steel and aluminum imports.
Market Volatility Continues
The news has left markets reeling, with the S&P 500 slipping into a correction, having fallen more than 10 per cent from its recent peak. Gold, a safe-haven asset, reached a record high of $2,990.21 as investors sought shelter from the turmoil.
Asian Markets Recover Some Losses
However, Asian markets enjoyed a broadly positive day, with hopes that Congress will pass a bill to avert a government shutdown. Hong Kong rose more than one per cent, recouping some of the losses suffered over the week. Other major markets, such as Shanghai, Tokyo, Wellington, and Manila, also advanced, although Singapore, Seoul, Taipei, and Jakarta were among the few that fell.
Economists Warn of Shutdown’s Consequences
Chris Beauchamp, chief market analyst at IG, warned that a US government shutdown could be costly, citing the estimated $11 billion loss to the US economy during the 2018-2019 shutdown.
Conclusion
The ongoing trade war and government shutdown fears have left markets in a state of uncertainty, with many investors concerned about the potential impact on the global economy. As the situation continues to unfold, investors will be closely watching for any developments that could affect the markets.
FAQs
Q: What is the current state of the global economy?
A: The global economy is experiencing uncertainty due to the ongoing trade war and government shutdown fears.
Q: What is the impact of the trade war on the global economy?
A: The trade war is causing market volatility and has led to a decline in major stock indices in recent sessions.
Q: What is the current state of the US government shutdown?
A: The US government is on the verge of a shutdown, with lawmakers still negotiating a spending bill to keep the government funded.
Q: What is the impact of a government shutdown on the economy?
A: A government shutdown can lead to significant economic losses, as seen in the 2018-2019 shutdown, which resulted in an estimated $11 billion loss to the US economy.
