Donald Trump Wants To Punish China For Failure To Contain Coronavirus
U.S. has signed the first phase of a trade deal with China back in January, and tariffs are still applied to many Chinese imports. However, the coronavirus pandemic, which originated in China, may lead to another wave of tariffs.
The desire to hold China to account is growing around the world, but the timing of the additional tariff proposals could not have been worse as the world tries to gradually reopen following the acute phase of the coronavirus crisis.
In addition, China is the only major economy which is mostly back on track after the epidemic, so hurting it would push the world economy deeper into the red zone.
Not surprisingly, the market is nervous about the tariff idea, and S&P 500 futures are down more than 2% in premarket trading.
Apple And Amazon Are Down In Premarket Trading
Both stocks have done well during the current crisis (especially Amazon) and the market’s expectations were very high. The reports were decent but it looks like the market wanted to see a better guidance for the upcoming quarter.
As a result, both stocks are under pressure during the premarket trading session, and their dynamics will have a material impact on the whole market today because of their huge market capitalization.
More Economic Data Ahead
U.S ISM Manufacturing PMI for April is set to be released today soon after the market open. Analysts expect that PMI will come at 36.9 compared to the previous reading of 49.1.
All upcoming economic reports will highlight a huge blow to the economy which was dealt by virus containment measures. The key question is whether the market will continue to shrug off bad data and maintain its current upside trend or if grim economic reports will lead to a pullback.
May is historically not the easiest month for markets, and this fact may also play a role, especially after the major rebound that took S&P 500 from 2200 to above 2900 in a very short period of time.