— This is the script of CNBC's news report for China's CCTV on April 5, Thursday.
We did see the reversal in the US stock market. At the beginning of the opening trading, the market panic of US stock rise because of the announcement of the 2nd round tariffs list from China. And, the Dow slumped by 500 points, companies associated with China's trade, such as Boeing and Tesla, plunged at the opening.
At the same time, in the commodity market, due to the impact that China impose tariffs on part of US agriculture products, the futures of US agriculture products had a sharp decline. After the announcement, the futures of US corns plunged 4% in the pre-market trade, Soybeans futures slumped more than 5%, and wheat futures fell more than 2%, in addition, cotton, soybeans oil, soybean meal, live cattle and pork and other futures products all declined in different degrees. But the hedge assets, such as gold have risen, and hit new multi week highs.
However, it was surprising that there was a strong reversal in the market at the close, and the 3 stock indexes rise. Then the market panic subsided, the Dow eventually closed up around 230 points, the stock amplitude was about 800 points throughout the day. The S&P rise 1.16% while the Nasdaq Composite Index went up 1.45%. Most futures of agriculture products were down a modest. What lead to the reversal in the US stock market? According to the analysis, the statements from the US government officer weaken the panic of the escalation of Sino-US conflicts. The US Commerce Secretary Ross indicated that the trading problems between China and US can be solved by negotiation, when he was interviewed by CNBC.
[Wilbur Ross] "well think about it even shooting wars end with negotiations - somebody sends a treaty, it has whatever terms it has. so it wldn't be surprising at all if thie ends with some kind of neg. whether it happens by May, that's another question. I think very diff to put a specific time denomination on negs as complex as these. 19 41 33 remember we had some 12 hundred products - their list which i haven't seen yet in english, has 13 hundred products - that's 25 hundred products to talk about"
Even Ross emphasized that China's new tariffs is only equivalent to 0.3% of US GDP and would be fetal to the US. But many analysts think the panic from soybeans exporters will put pressure to the following policy from the White House.
[SUTTER RELEGATED] "if tariffs come into play US will be relegated to being not a supplier to china at all..... at 25% would make us uncompetitive... just the loss in futures overnight was almost 2 bn less revenue for our US farmers."
Agriculture products are not the only one commodity affected. And the crude oil market has also plunged because of the concerns about the reduction in China's crude oil imports to the US. The Brent crude oil once fell below the $67 per barrel, it was even under the lowest price since March,19th. The negotiation between China and US will decide the following trend in US stock market. In other words, before the tariffs formally come into play, both parties still have time to ease tension, We will also pay attention to the trend of this event.