Spreadex Market Update

Trump’s latest trade war threat sends FTSE and co. tumbling on Wednesday



Just as the markets had begun to edge higher on the lack of trade war escalation, Donald Trump used his big, sweaty orange foot to boot the global indices back into place by threatening another $200 billion in Chinese imports with 10% tariffs, to be implemented as early as September.

That’s a significant ramping up of the measures put in place last Friday, when the two nations tit-for-tatted tariffs on $34 billion in respective imports, and has once again shoved the issue – which the markets often seen keen to avoid – back in investors’ faces, causing a return to the nuance-free trading that plagued parts of May and June.

Now nervously waiting for whatever China’s retaliation will be – beyond the immediate criticism of the proposal by Beijing – the markets went into panic mode on Wednesday. The FTSE shed 100 points after the bell, abandoning Tuesday’s 3 and a half week highs and tumbling under 7600 as its commodity and banking stocks bled red. The DAX, meanwhile, plunged 160 points to dive below 12450, with the CAC down 60 points at 5370.

The forex markets were less terror-stricken. No one currency really could get the upper hand, with sterling maybe the best performance. And even then that saw the pound flat against the dollar at $1.326, while rising 0.2% against the euro, which itself slipped the same amount against the greenback.

There doesn’t appear that could challenge this latest trade war twist for market dominance on Wednesday, though any further political chaos in the UK could make things worse for the FTSE and pound. How things are by the day’s end may well depend on what, if anything, China does in the next few hours.

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