The surprising optimism that defined the morning’s European trading was nowhere to be found at the US open.
While not as sharp as yesterday’s initial collapse, the Dow Jones was still in a bad way after the bell. Unlike its European peers – which managed, by some strange alchemy, to spin the last 24 hours as a positive – the Dow called a spade a spade, dropping another 200 points following the Trump team’s decision to press ahead with the promised tariff hike at 12.01am this Friday. That forced the index back under 25650, around 150 points above Thursday’s intraday lows, but still a 6-week plus nadir.
This, inevitably, had an impact on the European indices. The FTSE, which had risen as far as 7280, saw its gains trimmed to less than 20 points, putting it dangerously close to 7200. And though the DAX and CAC were still up 0.7% apiece, that’s a marked slowdown on the morning’s 1.1% rise.
It is highly unlikely that the trade war drama won’t carry over into Monday’s otherwise quiet session. The outcome of the 2nd day of talks between Beijing and Washington is as yet unknown; ditto what kind of retaliation China will drum up, something that is likely dependent on how Friday’s negotiations pan out. Nevertheless, investors are unlikely to have a relaxing weekend.
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