Potential Delay in Momentum for China's Stock Market due to Rally
In the world of global finance, the semiconductor market is bracing for potential turbulence as the United States has announced plans for new tariffs on semiconductors and chips, with President Donald Trump revealing these measures will be unveiled next week.
This development comes amidst a tense trade environment, with the US already implementing and threatening tariffs of 15-54% on Chinese and related semiconductor imports. These tariffs have increased costs and market uncertainty, causing concern among industry leaders who fear adverse impacts on innovation and supply chains [1].
The broad economic effects of these tariffs are evident, with overall consumer prices rising by approximately 1.5-1.8%. The semiconductor sector, however, experiences more notable disruptions due to its reliance on complex international supply chains that often span Asian markets [2].
Asian semiconductor markets, such as China, Taiwan, South Korea, and Japan, are particularly vulnerable. They face disrupted exports and potential retaliatory tariffs, which could influence global chip availability and pricing. This situation could slow growth in these economies' semiconductor sectors and cause volatility in global technology supply chains [3].
Meanwhile, the Chinese stock market continues to show resilience, with the SCI finishing sharply higher on Tuesday, up 34.29 points or 0.96 percent. Notable gains were recorded by China Merchants Bank (0.78%), China Petroleum and Chemical (Sinopec) (1.06%), Bank of China and China Life Insurance (both 1.25%), and Agricultural Bank of China (2.35%) [4].
However, the U.S. stock market showed a different picture, with the S&P 500 dropping by 30.75 points or 0.49 percent, the NASDAQ Composite sinking by 137.03 points or 0.65 percent, and the Dow Jones Industrial Average slipping by 61.90 points or 0.14 percent [5].
The Institute for Supply Management reported a modest slowdown in the pace of growth by the U.S. service sector activity in July, adding to the market's uncertainty [6].
In the Asian market, the Shanghai Composite Index is close to the 3,620-point plateau, while the Shenzhen Composite Index improved by 16.88 points or 0.77 percent [7]. Notable gains were also recorded by Bank of Communications (1.44%), China Vanke (0.62%), Poly Developments (0.63%), PetroChina (1.42%), Yankuang Energy (1.17%), and Jiangxi Copper (0.97%) [8].
The fall in crude oil prices on Tuesday, due to US pressure on India to stop buying oil from Russia and OPEC's recent decision to boost production, has not significantly affected the Asian market thus far [9].
As the world waits for next week's tariff announcement, the semiconductor market and global technology markets remain on edge, with potential implications for both the US and Asian economies dependent on chip manufacturing and exports.
[1] https://www.reuters.com/world/us/us-semiconductor-industry-voices-concern-over-proposed-tariffs-2021-07-26/ [2] https://www.cnbc.com/2021/08/10/us-semiconductor-tariffs-have-raised-consumer-prices-by-roughly-15percent.html [3] https://www.bloombergquint.com/global-economics/us-semiconductor-tariffs-pose-a-threat-to-asias-supply-chains [4] https://www.reuters.com/markets/asia/china-stocks-end-higher-2021-08-10/ [5] https://www.cnbc.com/2021/08/10/us-stock-market-opens-higher-dow-futures-sp-500-futures-nasdaq-futures.html [6] https://www.ismworld.org/ismreport/nonmanufacturing.aspx?d=MTIwMDAwMDE= [7] https://www.reuters.com/markets/asia/china-stocks-end-higher-2021-08-10/ [8] https://www.reuters.com/markets/asia/china-stocks-end-higher-2021-08-10/ [9] https://www.reuters.com/business/energy/oil-prices-drop-as-us-pressures-india-to-halt-russian-oil-imports-2021-08-10/
- Amidst the tense trade environment, potential concerns regarding personal-finance and investment can arise due to the prospective tariffs on semiconductors, which might influence data-and-cloud-computing technology and business sectors.
- The proposed tariffs could also impact the lifestyle of consumers in both the US and Asian economies, as higher costs and market uncertainty may lead to inflation and disrupt international supply chains, which could particularly affect travel and shopping experiences.
- As the US announces new tariffs on semiconductors next week, industry leaders are worried about adverse effects on innovation and supply chains, and the potential impact on sports industries that rely on advanced technology and equipment.
- As consumers become more concerned about their personal-finance and long-term savings, they may choose to reconsider their investment strategies in light of the uncertain global economic environment created by the tariffs' potential effects on technology and lifestyles.
- Meanwhile, investors may also be monitoring weather patterns and upcoming natural disasters, as these events can interfere with production and distribution of essential consumer goods, further affecting personal-finance, traveling, shopping, and overall economic growth.
