US: Shutdown ended, tariffs announced – BBH

Late yesterday, there were two developments in the US to note and the first being, the spending authorization issue was kicked down the road until February 8, points out the research team at BBH.  

Key Quotes

“This allows the US government to re-open.  Remember that half the time the government has shut down since 1977, the closure lasted 3 days.  This one is on par, and the economic impact is inconsequential.  Enough Democrats voted to reopen after the Republicans agreed to address the status of the so-called “dreamers.”  Yet this remains a very contentious issue, and one that may not be solved by the February 8 deadline.”

“Second, President Trump announced trade measures.  The US put tariffs on solar panels (30% to begin and falls to 15% after 4 years) and washing machines (quota and tariff, 20% tariff on the first 1.2 mln washing machines and 50% on any more washing machines).  Companies in these sectors in Asia weakened but Asian shares largely followed the US to new record highs.  South Korea quickly announced a WTO challenge.  Note that after underperforming on the pre-weekend MSCI warning, Korean shares bounced back smartly today, with the KOSDAQ leading the region with a 2.4% gain.  Also of note, the H-shares in Hong Kong, the HK Enterprise Index rose nearly 2% to extend its streak to 18 sessions.”