The context: China’s CSI 300 is down 1.3% year to date compared to the S&P 500, which is down 5.45% over the same period.
Here’s a snapshot of where global markets stood this morning prior to the opening in New York:
It is not surprising that Chinese stocks have taken a beating over the last few days. Analysts have been churning out gloomy estimates of the effect of the trade war. “We estimate ~2.2% of China’s GDP is directly hit by the tariffs. Assuming a 50% loss of exports to the US, China might lose ~1.1% of GDP in the near term. The actual loss will be larger as the shock ripples through to other sectors, especially the services sectors that facilitate merchandise exports,” Nomura’s Ting Lu and team told clients in a recent note seen by Fortune.
In New York, a note from Goldman Sachs’ Vicki Chang was more upbeat about U.S. equities: “We said that a shift in trade policy was the most obvious route for recovery in risk assets. We have seen a version of that, starting with the 90-day pause on reciprocal tariffs, product-specific tariff exemptions, and seeming openness to negotiating with China. Those are modest shifts that still leave significant tariffs and recession risk in place. But it is likely true that we are past the peak of new tariff ‘shocks,’ and possibly past peak policy uncertainty.”
