Markets may see red as US-China trade war escalates

With China retaliating against the US with punitive tariffs, the global markets felt the pain and are bleeding red. The SGX in early trading is showing weakness of 0.90 per cent and this clearly indicates that a gap-down opening is in store for the Indian markets. Now, for the Nifty, the final ray of hope is 11,035 level as it is the 200-DMA. The WPI data and earnings will continue to be on the market participants radar, while the results scheduled today are Edelweiss Financial Services, IIFL, Indian Bank, Nestle India, Pidilite Industries, Siemens and Union Bank. CPI inflation inched up to 2.92 per cent for the month of April and this was released post market hours on Monday.

Asian markets were under selling pressure in early deals on Tuesday following sharp sell-off on Wall Street overnight as trade tension between two biggest economies intensified with China retaliating against the US with tariffs on US goods. Hong Kong’s Hang Seng has nosedived 1.99 per cent and the Japanese Nikkei 225 has tumbled 1.13 per cent.

Back home, the key benchmarks opened the session with a negative bias and, thereafter, the indices were seen consolidating in a narrow band. However, in the last hour of trading, a sharp sell-off was seen and the indices posted ninth consecutive negative close. The BSE Sensex lost 0.99 per cent and Nifty slumped 1.16 per cent. The sell-off was severe in the broader market indices with Nifty Midcap and Smallcap plummeting 2.19 per cent and 2.69 per cent, respectively. On the sectoral front, barring Nifty IT, all other sectoral indices ended in the red with Nifty PSU and Nifty Pharma having the worst outing.

It was a bloodbath for the US stocks on Monday as China decided to go ahead and impose punitive tariffs on over 5,100 US products amounting to $60 billion effective from June 1.  In the end, the Dow Industrial Average tumbled 2.4 per cent, the S&P 500 dropped 2.4 per cent and the tech-heavy Nasdaq plunged 3.4 per cent.

The European stock markets went into a slide on Monday after China announced plans to retaliate with tariffs on US goods. Germany’s benchmark DAX lost 1.52 per cent, France’s CAC 40 index ended down 1.22 per cent and UK’s FTSE finished lower by 0.55 per cent.