There’s no way for investors to ignore the US-China trade slugfest anymore, not with Donald Trump threatening to impose a 10% tariff on $200 billion of Chinese imports.
What makes that claim so ludicrous – likely by design – is that China wouldn’t be able to do the same in kind, given they only imported $170 billion in US goods in 2016 (not that the country couldn’t go beyond the 10% tariff mark on those imports). Beijing immediately sent out a response, claiming that if the US ‘loses its senses’ it will ‘retaliate forcefully’.
In the last few weeks investors have been a bit flaky in terms of how much attention they were willing to pay to the trade tensions. Well, they took them seriously on Tuesday, the markets following Monday’s bloody trading with another truly troublesome decline.
The FTSE, which had avoided the more excessive losses, plunged 1%, striking 7550 for the first time in over 6 weeks. The eurozone indices, meanwhile, were even worse, the region already softened up by the political problems in Germany; the DAX dropped 200 points for the 2nd day in a row, while the CAC, IBEX 35 and FTSE MIB were all down between 1.2% and 1.3%.
Interestingly the dollar held off from losing its head like the global indices. While, yes, it shed 0.7% against the yen, it actually rose another 0.2% against the pound – cable is at a fresh 7 month nadir – and 0.3% against the euro.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved.