Wall Street ends in the red as Trump turns the screw of China

Wall Street's stocks skidded hard into the red on Thursday and back into the tracks of their early session gains following Trump's new tariff announcements. Trump announced that he will add a 10% tariff on the remaining US$300 billion worth of goods the US imports from China and will apply them on 1 September.

This is when the next round of trade talks between the US and China is set to commence, which may mean that they will not go ahead at all if he decides to change his mind ahead of the meetings. However, at present US$250 billion worth of goods are already subjected to a 25% tariff and Trump is turning the screw on China’s manufacturing industry which has shown in the latest data that it remains in contraction territory with yesterday's PMI reading of 49.7.

Meanwhile and consequently, the Dow Jones Industrial Average down 280.85 points, or 1.1%, to 26,583.42 to the close. The S&P 500 index lost 26.82 points, or 0.9% to end at 2,953.56 while the Nasdaq Composite Index dropped 64.30 points, or 0.8%, at 8,111.12. The VIX jumped to a nearly two-month high rising more than 13% to trade above 18.0 for the first time since June 4.

US data

"The July ISM manufacturing index fell to 51.2 down from 51.7 in June and new orders firmed to 50.8 up from a previous reading of 50. While the production manufacturing index fell to 50.8, down from 54.1 in June. June construction spending fell 1.3% m/m," analysts at ANZ Bank explained. 

DJIA levels

The DJIA index extended losses below the 20-DMA and has now broken below the 50-DMA prospects of the July highs are now on the backburners. The index is now supported at the 50-day moving average, losing its grip at the 23.6% retracement of the 3rd June low to 12th July that met the April 23rd and 1st May double-top highs. Bears can look to the 27th June swing lows at 26465 and then the 25th Feb and 11th June highs at 26248.