Tensions between Economic Superpowers and Stocks

Tensions between the U.S. and China started a long time ago. However, the coronavirus pandemic created additional problems. It is not surprising that investors are closely watching the situation to learn more about the situation. Unfortunately however, stocks were mixed on September 7 as investors reacted to rising tensions between the countries.

Importantly, Hong Kong-listed shares of Semiconductor Manufacturing International Corporation (SMIC) dropped 22.88% on Monday. The country’s largest chip manufacturer is an important player in China’s ambition to grow its domestic semiconductor industry.

Interestingly, the Hang Seng Tech index dropped 4.57% on the day to 7’240.96. Furthermore, the index fell after a U.S. Defense Department spokesperson stated that Donald Trump’s administration could impose export restrictions on China’s largest chip manufacturer.

People should take into account that, the potential move would mark a major escalation in the tech battle between the U.S. and China. In January, the U.S. and China signed a partial trade agreement.

Stocks and risk factors

Importantly, mainland Chinese stocks led losses among the region’s major markets. The Shanghai Composite dropped 1.87% to about 3’292.59. In the meantime, the Shenzhen Composite fell 2’729% to around 13’284.03.

Hong Kong’s Hang Seng index declined 0.43% to 24’589.65.

Japanese stocks saw losses on the day as the Nikkei 225 dropped 0.5% to 23’089.95. At the same time, the Topix index declined 0.42% to end its trading day at 1’609.74.

Interestingly, South Korea’s Kospi index strengthened its position on Monday. In fact, the index added 0.67% to close at 2’384.22.

Australia’s S&P/ASX 200 gained 0.33% to 5’944.80.

To sum up, stocks were mixed on September 7. As stated above, investors reacted to news regarding the tensions between the economic superpowers. Both countries should work together to solve all their problems as soon as possible. At the moment, there is no need to create additional problems.