US-CHINA TRADE WAR INTENSIFIES; 10700 KEY SUPPORT BELOW 10755

US-CHINA TRADE WAR INTENSIFIES; 10700 KEY SUPPORT BELOW 10755

WORLD MARKETS

While Nasdaq ended flat, Dow and S & P 500 fell 0.4% and 0.2% respectively on US-China trade war concerns. Dow extended the losing streak to fifth straight day.

On Friday, Trump announced that the U.S. would impose a 25% tariff on up to $50 billion of Chinese products. Tariffs on an initial list of goods worth some $34 billion will kick in on July 6. In response, China announced tariffs on the same total value of products, with duties on $34 billion of U.S. goods expected to be implemented in July.

Treasury prices gained on safe haven buying with the benchmark 10-year yield at 2.92%, while the short-term two-year yield declined to 2.54%.

US crude rose 1.2% to $65.85 and Brent gained $1.90 to $75.34 on reports that oil producers were discussing a smaller-than-expected increase in production.

In Europe, FTSE ended flat while other markets fell 0.4%-1.4%.

AT HOME

Benchmark indices ended lower by a fifth of a percent after a rangebound session. Sensex lost 74 points to settle at 35548 while Nifty finished at 10780, down 18 points. BSE mid-cap and small-cap indices fell 0.2% and 0.8% respectively.  BSE Metal and Basic Material indices were the top losers, down 1.7% and 1.2% respectively while Oil & Gas and Energy indices were the top gainers, up 1.2% and 0.5% respectively.

FIIs net sold stocks, index futures and stock futures worth Rs 754 cr, 576 cr and 158 cr respectively. DIIs were net buyers to the tune of Rs 824 cr.

Rupee appreciated 2 paise to end at 67.98/$.

OUTLOOK

Trump, late yesterday, said that he had asked the U.S. Trade Representative to identify $200 billion worth of Chinese products that will be subject to additional tariffs of 10%.

Hang Seng and Shanghai are down nearly a percent and half owing to this news. Nikkei is down 0.3% and SGX Nifty is suggesting about 50 points lower start for our market.

Nifty, after achieving 10870 target last week, has been in a consolidation mode. 10893, the top made last week, is the immediate hurdle, a crossover of which is required for a fresh upmove.

On the way down, 10755, the low made last week, is the immediate support below which, 10700, where 34-DMA is placed, would be the important support to eye.