The S&P/ ASX200 (ASX: XJO) is 1.2% lower this lunchtime amidst unverified news reports or rumours attributed to financial news wire Bloomberg that China has responded to President Trump's latest threat to lift trade tariffs by ordering state buyers to halt all U.S. agriculture imports. I could not find the news reports on Bloomberg myself though.
If correct the news would be a major escalation in the trade war between the world's two largest economies and traders are likely to be glued to President Trump's Twitter feed for any response to the news.
The Chinese yuan has also slumped today in a move that will only intensify President Trump's accusations that it's being unfairly manipulated lower by the Chinese state to protect its economy.
US futures have also turned sharply lower on the reports down around 1% or more, with the gold price soaring to a near 6-year high of US$1,460 an ounce. The last time gold was this high was during the Greek sovereign debt crisis of 2011 that investors thought could prove contagious.
Gold miners Evolution Mining Limited (ASX: EVN), Resolute Mining Limited (ASX: RSG) and Northern Star Resources Ltd (ASX: NST) are up 4.4%, 3.2% and 1% this lunchtime.
Given the US Federal election is just 15 months or so away China may have decided falling markets and economic pain will hurt tariff-loving Trump's chances of re-election.
If so investors could be in for a sticky time, although on the bright side cheaper share prices represent more value for anyone with spare cash to invest.
