Trade concerns are increasing as the threats for tit-for-tat tariffs by USA and China on each other’s products are growing.
Trade uncertainty prevails in the markets. Worries linked to trade, highly affecting investors’ sentiment, have been their main concern since the beginning of 2018.
The world’s two largest economies have already imposed tariffs to $50 billion of each other’s goods since July. The two economic giants completed trade talks among mid-level officials last month, without any major breakthroughs, as widely expected.
On Friday, President Trump threatened new tariffs on virtually all Chinese imports into the United States, i.e. duties on $267 billion of goods. China is ready to respond accordingly with counter-tariffs. China’s Foreign Ministry spokesman stated: “If the U.S. side takes any new tariff measures against China, then the Chinese side will inevitably take countermeasures to resolutely protect our legitimate rights”.
Eurozone investor’s morale for August dropped from 14.7 points to 12.0 according to Sentix’s index. Emerging markets, political developments in Europe and trade tensions are among the main factors affecting investors’ sentiment.
Forex Market and Trade concerns
It seems that markets haven’t yet fully priced in the impact of possible new U.S. tariffs on virtually all Chinese import and China’s response.
The Dollar traded flat against its major traded rivals as some Emerging markets rebound.
The Euro fall 0.1 % after losing more than 0.5% during the previous session following the publication of the U.S. job data.
The Australian Dollar dropped close to a 2-1/2 low hit on its previous session as trade uncertainty between the States and China is general. The Aussie, often seen as a liquid proxy of China-related trades, is vulnerable to the respective trade concerns.
The Sterling inched up following a volatile week, negative Brexit headlines and the biggest weekly drop in a month. The pound traded flat against the single currency.
Oil prices soar as trade war escalates and US drilling halted, following 3 days of losses. Brent crude futures were up 0.7%, i.e. 48 cents a barrel, while U.S. crude futures rose by 64 cents from their last close, i.e. 0.8%.
Gold prices and silver prices rose during the morning trade following threats over a new round of China-U.S. trade tariffs.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.