Global Market Reactions to the China–US 2018–2019 Trade War: Evidence From a Chinese Media Sentiment Index

Leonardo Gambacorta, Chao He and Fan Dora Xia

International Finance, 2025, vol. 28, issue 3, 209-219

Abstract: We analyse the effects of the trade war between China and the United States in 2018–2019 using a Trade Sentiment Index (TSI) based on artificial intelligence–powered big data textual analysis that assesses the positive or negative tone of the Chinese media. Our results show that in this trade war, no equity market has gained. We find the TSI improves upon traditional keyword‐counting methods both methodologically and in explanatory power. The TSI contributes around 10% of model capacity to explain the stock price variability of 60 equity markets in countries that are more exposed to the China–US value chain. Most of the contribution is given by the tone extracted from social media (9%), while that obtained from traditional media explains only a modest part of stock price variability (1%).

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bla:intfin:v:28:y:2025:i:3:p:209-219

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