The US stock market is making Bitcoin look stable by comparison! After a 600-point plunge on Monday, the Dow Jones Industrial Average rose 400 points on Tuesday. Yesterday morning, it fell 600 points once again but then rallied almost 800 points off its earlier lows to end the day up more than 200 points. Throughout this period of extreme volatility, the US Dollar index against a basket of major currencies has remained remarkably steady; moving only within a half-point range from 89.40 to 89.90 and last night closed almost exactly at the mid-point of this band.
China’s Ministry of Commerce yesterday forcefully condemned the US announcement of widespread tariffs on its export industries. “Disregarding strong representations by China, the United States announced the tariff proposals that are completely unfounded, a typical unilateralist and protectionist practice that China strongly condemns and firmly opposes,” the Ministry said in a statement overnight. “We have the confidence and ability to respond to any US trade protectionist measures… As the Chinese saying goes, it is only polite to reciprocate.” Within hours, China had announced 25% tariffs on 106 US products, most prominent of which were soybeans, aircraft, cars and chemicals. As the US stock market dived – dragging all global equity indices lower in its wake – the Presidents new economic advisor, Larry Kudlow, duly popped up on 24-hour financial TV. Speaking on CNBC he said, "Don't overreact, we'll see how this works out... At the end of this whole process, the end of the rainbow, there's a pot of gold." Asked on Fox News if there is a trade war, he replied, “Absolutely not. Absolutely not. And let me just say right at the top, number one, blame China, not President Trump.”
Away from trade, there was plenty of incoming US economic data too. The ADP Survey of private sector payrolls showed an increase of 241k on the month whilst factory orders rose 1.2%. The ISM non-manufacturing index printed at 58.8, which was 0.7 percentage point lower than the February reading of 59.5. The Business Activity Index decreased to 60.6, 2.2 percentage points lower than the February reading of 62.8, reflecting growth for the 104th consecutive month, at a slower rate in March. The New Orders Index registered 59.5, 5.3 percentage points lower than the reading of 64.8 in February. The Employment Index, meantime increased 1.6 percentage points in March to 56.6 from the February reading of 55.0. The USD index opens in Asia this morning at 89.65.