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03-Apr2018

US markets closed lower on Monday

The US markets closed lower on Monday, driven by both uncertainty surrounding trade policy and weakness in the large-capitalization technology and internet sectors. Trade policy continued to be in the forefront in the minds of investors after China announced tariffs on about 130 US goods, including a 25% penalty slapped on US pork and 15% on fruit. The news means China has made good on its threat to retaliate against the Trump administration's tariffs on Chinese steel and aluminum imports. Besides, the Trump administration this week will unveil a list of advanced technology Chinese imports targeted for US tariffs to punish Beijing over technology transfer policies, a move expected to intensify trade tensions between the world's two largest economies.

On the economic front, the ISM manufacturing report for the same month came in at 59.3, compared with a previous monthly reading of 60.8. Separately, US factory activity slowed in March amid shortages of skilled workers and rising capacity constraints, but growth in the manufacturing sector remains underpinned by strong domestic and global economies. The Institute for Supply Management (ISM) survey published also showed a surge in the cost of raw materials and worries among manufacturers about the impact of steel and aluminum import tariffs imposed by President Donald Trump last month to shield domestic industries from what he has described as unfair competition from other countries. The ISM said its index of national factory activity slipped to a reading of 59.3 last month from 60.8 in February.

Separately, the IHS Markit manufacturing purchasing managers index hit a three-year high of 55.6 in March, up from 55.3. A reading on construction spending, meanwhile, inched up 0.1% in February to a seasonally adjusted annual rate of $1.27 trillion.

The Dow Jones Industrial Average lost 458.92 points or 1.90 percent to 23,644.19, the Nasdaq dropped 193.326 points or 2.74 percent to 6,870.12, while the S&P 500 was down by 58.99 points or 2.23 percent to 2,581.88.


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