China’s Tariff Escalation Wipes $1 Trillion from Global Stocks but Bitcoin Unaffected

The Dow and broader U.S. stock market plunged anew on Monday after China responded to President Trump’s trade-war escalation by announcing a new round of tariffs on $60 billion worth of American goods. Bitcoin (BTC) was immune to the trade-war spat as it approached $8,000 for the first time in ten months, underscoring its status as a non-correlated asset.

Dow Plunges; S&P 500 Follows

All of Wall Street’s major indexes headed for big losses Monday, as volatility approached the highest level of 2019. The Dow Jones Industrial Average fell 617.38 points, or 2.4%, to 25,324.99. The blue-chip index was down by as much as 722 points earlier in the day.

Dow Jones Industrial Average

The broad S&P 500 Index of large-cap stocks fell 2.4% to 2,811.87, with nine of 11 primary sectors reporting losses. Among them, six reported a decline of 2% or more. Information technology was the biggest loser, falling more than 3.6%.

An oversized drop in tech shares weighed heavily on the Nasdaq Composite Index, which fell 3.% to 7,647.02.

The CBOE Volatility Index, commonly known as the VIX, surged more than 32% and peaked at 21.32. That would have marked the highest settlement since early January. VIX would later pare gains slightly to settle just above 20.

China Responds to Trump’s Tariff War

More than $1 trillion was wiped from global markets on Monday after China announced tariffs on an additional $60 billion worth of U.S. imports. The move came two days after the White House raised tariffs on $200 billion worth of Chinese imports.

Beginning on June 1, China will apply an import surcharge on 5,140 U.S. products, including tariffs of 25% on agricultural goods.

“We are determined and capable of safeguarding our legitimate rights and interests,” Foreign Ministry spokesperson Geng Shuang said, according to CBC. “We hope the United States will meet China halfway to address each other’s legitimate concerns.”

The United States and China last held trade negotiations on Thursday, with Treasury Secretary Steve Mnuchin describing the talks as “constructive.” No additional word on progress has been made from either side.

Bitcoin Extends Dramatic Rally

The cryptocurrency market reached a new level of euphoria Monday, as bitcoin launched toward $8,000 for the first time since last summer.

The largest and most influential cryptocurrency peaked at $7,845.00 on Bitfinex, having gained 12%. Bitcoin’s market cap now stands at $138.4 billion.

Bitcoin Price

Read more: Five Reasons Why Bitcoin is Surging

Alternative coins also spiked, with bitcoin cash (BCH), Binance Coin (BNB) and IOTA (MIOTA) printing double-digit gains. The total market cap swelled to $230.9 billion, a new high for the year.

Crypto market

Bitcoin’s dominance rate has been gradually climbing for the better part of two months. On Monday, it peaked above 60%, the highest level since October 2017. With the rally, bitcoin has gained more than 100% so far this year. Investors and market strategists are bracing for a big pullback, though the fear of missing out (FOMO) has triggered a bout of panic buying not seen since the 2017 bull market.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. Charts via Stockcharts.com and CoinMarketCap.com.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi