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Selling in China Unsettles Global Stocks This Morning on Tariff Threats -- But US Stock Indexes Are Recovering from Early Selling

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Editors Note: This article was originally published in John Murphy's Market Message on Thursday, August 2nd at 1:43pm ET.

TARIFF THREATS PUSH CHINESE MARKETS LOWER ... Threats of higher tariffs on Chinese imports, combined with Chinese threats of retaliation, put international markets on the defensive today. It started in Asia, spread to Europe, and caused a lower stock opening here. China took the biggest hit. The red line in Chart 1 shows the Deutsche X-Trackers CSI 300 China A-Shares ETF (ASHR) falling more than 2% today to the lowest close in more than a year. That helped pull emerging market stocks and currencies lower. The green line in Chart 1 shows the WisdomTree Chinese Yuan Fund (CYB) also falling to the lowest level for the year. The falling yuan contributed to another drop in the price of copper which is trading near a 52-week low. In Europe, export-oriented countries like Germany led the day's decline there. A modest dip in global bond yields reflected some safe haven buying as well. And as usually happens when global markets are under stress, money flowed into the U.S. dollar. That weakened stocks tied to materials, while export-oriented industrials lagged behind in morning trading. The good news is that stock indexes in the states are trying to recover from their earlier losses. Technology stocks are leading the way.

                                                                                          Chart 1

John Murphy
About the author: is the Chief Technical Analyst at StockCharts.com, an renowned author in the investment field and a former technical analyst for CNBC. With over 40 years of market experience, he is the author of numerous popular works including Technical Analysis of the Financial Markets and Trading with Intermarket Analysis. John's timely market commentary and expert analysis is available exclusively for StockCharts Members through his Market Message blog. Learn More
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