InvestorQ : What has the stock market fallen through the weak? Is it because of the trade war?
Mitali Bhutta made post

What has the stock market fallen through the weak? Is it because of the trade war?

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Dawn Cherian answered.
1 year ago
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Yes you are right; it is absolutely because of the trade war that markets are so jittery. This is not only true of India but also of other markets across the world. Now there is a new development in trade war. Even as the US and China are having trade talks, the US has gone ahead and imposed the higher tariffs of 25% on Chinese imports worth $200 billion. Now $1 billion is Rs.7000 crore so obviously $200 billion is quite a lot! That will make Chinese products expensive in America and reduce their demand. So China stands to lose. Also, American consumers will pay more so even the US will stand to lose in the form of higher inflation.

There are two more reasons why the markets are getting worried. Normally, when there is a trade war, then both the countries see a slowdown in growth. Since China and the US are the two biggest contributors to absolute growth of GDP in the world, this trade war will mean that every country faces pressure. For example, India will see its exports reducing and its IT income reducing. Secondly, there is a worry that China will drop its currency. When China does then all other countries including India will also have to drop their currencies to remain competitive. That will mean FII outflows, which is again not good news. It is these reasons that are keeping markets jittery at this point of time.

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