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Could Trump’s News Conference Trigger a Market Crash?

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  • President Trump said that he will hold a news conference about China today. The move comes amid a growing rift between the world’s two biggest economies. US stock markets crashed towards the end of trading on Thursday after the announcement.
  • US-China relations have soured amid the blame game over the COVID-19 pandemic. China bullying its neighbors amid the pandemic has been another flashpoint. There’s also a rift about China imposing national security laws in Hong Kong. The US Senate already passed a bill that could delist Chinese shares from US exchanges.
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Trump’s China news conference

President Trump will likely hold a news conference about China today. After he announced the news conference on Thursday, the Dow Jones Index (NYSEARCA:DIA) fell by 300 points in 45 minutes. Over the last two years, US stock markets have crashed whenever there’s an escalation in the US-China trade war.

US-China relations and US stock markets

Today, President Trump’s news conference comes amid souring US-China relations. While the year started off well with the signing of phase one of the trade deal, the COVID-19 pandemic changed the picture. President Trump labeled the coronavirus a “Chinese virus.” The US has also alleged that China is taking advantage of the pandemic by bullying its neighbors.

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Will Trump move towards delisting Chinese companies?

China imposing national security laws in Hong Kong complicated the scene. There’s also the proposal for increased scrutiny of foreign firms, which might mean delisting Chinese companies like Alibaba (NYSE:BABA), Baidu (NASDAQ:BIDU), and NIO (NYSE:NIO). Today, President Trump’s news conference should provide more information about sanctions against China. Notably, a hawkish approach might trigger a US stock market crash.

Trump’s news conference and US stock market crash

China might retaliate if President Trump announces severe steps during his new conference. In the US-China trade war, China retaliated with tit for tat tariffs. The country might take an even stricter approach if US actions challenge its sovereignty. Currently, US-China ties seem to be heading towards a new Cold War. US stock markets might not be pricing in a deterioration in US-China ties. There might be a stock market crash if tensions escalate beyond a certain point. US stock market futures point to a weak opening today.

Will Trump risk a US stock market crash?

Since the presidential election is this year, President Trump might not want to risk a US stock market crash. However, bashing China could be his key plank in the 2020 presidential election. We’ll know more information after President Trump’s news conference. Read Is Cold War 2.0 Coming After the US-China Trade War? to learn more.

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