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Markets Mixed, With China Dropping, as Trade War Intensifies

Markets Mixed, With China Dropping, as Trade War Intensifies

China’s stock market opened at a four-year low, and its currency slipped after the trade war between the United States and China escalated.

The Chinese market dipped modestly lower on Tuesday after President Trump pledged Monday in Washington to impose tariffs on $200 billion worth of Chinese goods as soon as next week. Still, the drop was enough to take China’s stock market down to its lowest point since 2014.

Stocks in the United States looked poised for a sell-off as futures were trading in negative territory. In Europe the picture was more mixed. Futures for the biggest European companies were trading up, but markets like Britain were pointing down.

For China, the tariff threat comes as the country is grappling with a slowing economy and a bear market that is eating into its financial health.

Tariffs could knock an additional 0.7 percent off its annual economic growth figure, said Fang Xinghai, vice chairman of China’s securities regulator. He was speaking Tuesday morning at a World Economic Forum conference.

But the Chinese government has the monetary and fiscal tools to cushion any impact, Mr. Fang added.

Analysts have raised concerns that China could retaliate against the United States by weakening its currency against the dollar. That would make its exports cheaper and more competitive to foreign buyers, blunting higher costs that American tariffs would impose.

China’s renminbi has weakened by more than 7 percent against the dollar this year, an unusual slide for a currency that does not trade freely and is carefully managed by Beijing. The daily exchange rate for China’s yuan is set by the central bank and trades in a narrow band against the dollar.

On Tuesday, the renminbi was weaker against the dollar. In Hong Kong, which operates outside mainland China’s tight financial controls, the renminbi was also weaker.

In Hong Kong, stocks were down 0.6 percent by midday. In Shanghai, where China’s biggest companies are listed, the market pared some of its earlier losses and was trading down 0.1 percent. On Monday, the market dropped by 1.1 percent to its lowest point since November 2014.

In Shenzhen stocks were down 0.4 percent. They fell by 1.5 percent on Monday.

Other Asian markets were sanguine, with stocks in Japan up nearly 2 percent. South Korea’s stock market gained 0.4 percent.

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