Things are heating up again between the USA and China, this time, tariffs and Chinese-located companies aren't center-stage. It's Coronavirus and a possible cover-up. A bold statement by the president, accusing China of covering-up the true origins of the virus, and their inadequate handling of the breakout. The question rises. Is there a need for worry, financially?
The short answer to that question is no. But let's break it down. Stocks rose today for the fourth straight day, even after a grim job report last week, and tensions between the United States and China- hopeful that not even this can stop the booming United States economy. Chinese officials fired back with accusations towards the Trump Administration going as far as blackmail. There was worry from investors on what this could do to United States markets, even global markets. The Chinese recession continues, yet their markets rose, as well as other prominent global markets like the Dax and FTSE. For more information regarding stock markets and other global markets Click Here. No military involvement has been involved so far, but only time can tell if the tensions will escalate or fizz away.
Something important to keep in mind throughout these tensions, is a deal made by Chinese president Xi Jinping and his officials. Their promise? To buy a whopping extra 200 billion dollars in American goods over the next two years, which can mean a lot for our economy. Historically, Chinese promises haven't always been kept- following this one will be an important development. A bit worrisome, the promise can be hard to fulfill, during the grim economic times in China; a recession, after the first quarter GDP sank almost 7 percent.
This has been the first major tensions between the USA and China, since the ongoing trade war, and time will tell if this has the ability to affect our markets- these past few days, the markets have been nothing but green.
Summary: Tensions between the USA and China are coming to a boil once more, but it's not over tariffs this time. It's over an accused Coronavirus cover-up, and an accusation of blackmail after China fired back on the Trump Administration's charges. Global markets rose today, including China's, despite their recession. United States stocks rallied for the fourth straight day. It's important to keep the promise by Chinese president in mind, because through their recession and grim economic times, the question remains- will they keep their promise?
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