According to the news report by Bloomberg, the stock markets in the United States declined the most since March as investors continued to be concerned about President Donald Trump’s threats to increase tariffs on goods imported from China.
The S&P 500 faced lows for the second day in a row, but managed to stage a slight recovery on closing the trading day. However, all the 30 companies listed on the Dow Jones Industrial Average closed the day trading down thanks to the fear that further tariffs would roil the global economy.
China’s leading trade negotiator is still planning to visit Washington DC for the trade talks between US and the Asian giant despite the fact that Trump is upping the pressure on a deal that most had considered all but closed before his surprise tweets on Sunday.
Independent Advisor Alliance’s chief investment officer Chris Zaccarelli stated that investors’ complacency about the trade deal between the two countries had finally caught up with them since they had been expecting a smooth ride to the finish line. However, he said, real life wasn’t as simple as that and now the deal was running into issues before its close.
In international markets, the European STOXX Europe 600 Index closed the trading day at its lowest in 5 weeks. While Korean and Japanese markets were closed on Monday, both countries’ stocks dropped when markets reopened on Tuesday. However, stocks in both Hong Kong and Shanghai showed some signs of recovery after plunging on Monday.
Bonds in the European Union were weaker after the EC (European Commission) cut its growth forecast and warned that the once-more escalating trade tensions could hurt growth even more.
The price of oil also felt the impact of the continued trade war as it declined towards $60 per barrel.
At the moment, investor sentiment is fragile as markets and traders await the next developments in the trade negotiations between the world’s two largest economies. China confirmed that its top trade negotiator, Vice Premier Liu He would be present for the trade negotiations scheduled to take place on May 9 – May 10. However, the Chinese government also warned that it was also preparing tariffs on American imports if Trump goes ahead and carries out his threat to increase tariffs even further.
Here is the list of events that markets are looking at for this week:
- China releasing its trade data on Wednesday
- US releasing its trade data on Thursday
- China reporting inflation on Thursday
- The United States CPI report for April to be published on Friday
- The US-China trade talks on Thursday and Friday.
In the stock market:
- The S&P 500 Index dropped 1.7%
- The Nasdaq Composite Index fell 2%
- The Dow Jones Industrial Average declined 1.8%
- The STOXX Europe 600 dropped 1.4%
- The MSCI Emerging Market Index fell 0.8%
- The MSCI Asia Pacific Index declined 0.3%
- The Bloomberg Dollar Spot Index went up by 0.2%
- The Euro dropped 0.2% to trade at $1.1178
- The Japanese Yen gained 0.5% to trade at ¥110.19 to the US dollar
- The British Pound declined 0.3% to trade at $1.3064
- The MSCI Emerging Markets Currency Index fell by 0.2%.
- The 10-year Treasuries’ yields dropped by 2 basis points to 2.45%
- The German 10-year yield dropped 4 basis points to -0.04%
In the commodities market, the West Texas Intermediate, the American crude oil benchmark, dropped to its lowest in over 5 weeks. The price of oil fell by 1.8% to trade at $61.12 per barrel.