Trade Talks Tank
Trade talks between the US and China have taken a turn for the worse with President Trump accusing China of backpedalling on commitments. Trump has also threatened to impose additional tariffs to come into effect on Friday…Here we go again!
Tensions between the two superpowers escalated at a rate of knots yesterday after a few weeks of deteriorating relations finally sparked into something more serious. The threat of more tariffs ends a 5-month truce in an economic conflict that has cost both countries billions, stagnated global growth and severely damaged international supply chains.
A return to the trade war could have catastrophic ramifications for markets, which experienced a serious dip yesterday before recovering most of the early losses. However, this may be just the start of more pain to come for many sectors which had recovered nicely since the start of 2019.
The manufacturing and semiconductor markets, in particular, are extremely exposed to fraying relations with China. Companies and ETFs in the semiconductor space have performed extremely well while tensions were simmering, rising between 30-48% since the start of 2019. However, this bull run may come to an abrupt halt in the coming days if tariffs come into force and volatility goes through the roof again…So keep your eyes peeled.
This week will be an incredibly important one for markets. Let’s hope the US and China can see eye to eye before relations dissolve into the market madness we saw back in 2018.
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