When US and China cannot come to a trade agreement …

The stock markets were driven by investors’ sentiments in times such as this. The on-going trade negotiations between the US and China is one factor driving the global stock markets. The markets were generally positive until 6 May when President Donald Trump suggested that trade negotiation was going too slowly.

The stock indices from the start of 2019 and 30 April 2019 were up for the major indices below. Shanghai Composite Index was up 23.8%.

Stock Indices 31-Dec-18 30-Apr-19 YTD Change
Shanghai Composite 2,493.90 3,086.40 23.8%
Nasdaq (USA) 6,635.28 8,095.39 22.0%
Hang Seng (HK) 25,845.70 29,699.11 14.9%
S&P 500 (USA) 2,506.85 2,945.83 17.5%
Dow Jones (USA) 23,327.46 26,592.91 14.0%
Nikkei 225 (Japan) 20,014.77 22,258.73 11.2%
STI (Singapore) 3,068.76 3,400.20 10.8%

Then came the bombshell that the trade negotiation seemed to hit a roadblock. During this week, the stock indices corrected downwards.

Stock Indices 30-Apr-19 8-May-19 Change
Shanghai Composite 3,086.40 2,893.76 -6.2%
Nasdaq (USA) 8,095.39 7,943.32 -1.9%
Hang Seng (HK) 29,699.11 29,003.20 -2.3%
S&P 500 (USA) 2,945.83 2,879.42 -2.3%
Dow Jones (USA) 26,592.91 25,967.33 -2.4%
Nikkei 225 (Japan) 22,258.73 21,602.59 -2.9%
STI (Singapore) 3,400.20 3,283.84 -3.4%

Shanghai Composite Index corrected 6.2% down between end of April to 8 May. This was significant adjustment. As for today 9 May 2019, the Shanghai Composite was 2,850.95 points. This brought the drop to negative 7.6%.

It now depends on the China trade negotiators and the US’ to come to an agreement this week. Otherwise, more red ink is in the pipeline. It now appears that month of May is going to be a frightening month for stock investors.

Copyright © 2019, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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