By : The Dow Jones after the US government rolled back a handful of minor restrictions on Huawei. But traders are recklessly missing the bigger picture.
Former US ambassador Curtis Chin warned this morning that the trade war with would “” as Xi Jinping battles to “show he’s in charge.”
Dow Jones Explodes Higher
After , the zoomed higher today, gaining 125 points or 0.48 percent by midday.
The stock market is surging, but investors are missing the bigger trade war picture | Source: Yahoo Finance
The is also seeing a strong recovery, up 20.68 points or 0.73 percent as of the time of writing. The leads the pack with a 75.16 point or 0.98 percent surge to 7,777.
Traders appear to be in risk-on mode after the US government eased restrictions on Huawei for a 90-day period. Google, who yesterday cut ties with Huawei triggering a broad market selloff, and will continue to provide Android updates for Huawei devices.
The has eased worries of “tech cold war,” but the specter of an all-out US- trade war still looms large.
Google Dumps Huawei from Android After -Led U.S Blacklist
— CCN.com (@CCNMarkets)
US-China Trade War Will “Get Worse Before It Gets Better”
Speaking to CNBC, former US ambassador Curtis Chin painted a gloomy picture of the ongoing trade negotiations, saying things will get worse from here. He cited ’s descent into nationalism and Xi Jinping’s desire to appear strong.
“Xi Jinping needs to show he is in charge, that there’s stability in that nation as he continues to struggle to revive that better life for all Chinese.”
In other words, the Chinese president isn’t likely to back down yet. Chin said that is a “vindictive” nation which isn’t about to succumb to US threats.
“If we look at ’s behavior, it does so many things to lift up their people, but it is also known as a vindictive nation, (it does) so many things to countries and companies they don’t necessarily like.”
Growing Nationalism in China Could Threaten Dow
Chin also pointed to signs of increasingly nationalist policies in . The country delayed this week’s broadcast in what is widely viewed as a crackdown on US entertainment exports.
“It shows you that is ramping up its nationalism as it tries to think through how to deal with this US- back and forth right now.”
Has winter arrived in along w/ ? WSJ: finale frozen out in . An HBO spokesman said restricted Tencent from airing due to trade dispute. Then again, that message: break the wheel…
Ht— 🚶🏻Curtis S. Chin (@CurtisSChin)
If is turning further towards nationalism, it could lead to an even tougher deadlock for trade negotiations.
For now, trade talks have ground to a halt. famously increased tariffs from 10 percent to 25 percent on $200 billion worth of Chinese goods. struck back with additional tariffs on $60 billion US goods.
Focus on the Big Picture
The lifting of Huawei restrictions is undoubtedly a breath of fresh air for traders. Chipmakers like Qualcomm and Nvidia are among the biggest risers, up 1.89 percent and 2.14 percent, respectively.
However, it would be wise for investors to zoom out and take stock of the bigger picture. The Huawei debacle is a small part of a much broader trade war. One with no signs of reaching a conclusion yet.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.
Published at Tue, 21 May 2019 16:17:03 +0000
