Despite a lack of news surrounding the ongoing takes between the US and China, the various aggressions reported last night – including news that China has stopped by soybeans from the US, with the latter potentially set to impose restrictions on certain Chinese telecommunication companies selling equipment in America – have reignited fears of a trade war.
It’s clear that investors aren’t confident about the outcome of the day’s delegation get-together. The Dow Jones plunged more than 250 points after the bell, diving below 23700 for the first time in a month. Granted the Dow is also dealing with a fairly hawkish Fed statement from Wednesday night, one that kept up the dollar’s hopes of 3 (or even 4) more rate hikes in 2018.
With little else to go on, the European indices took their cue from the US losses. The CAC slipped 0.3%, while the DAX dropped 0.6%, the latter abandoning the 12800, 3 month highs struck on Wednesday. As for the FTSE, the UK index shed 50 points, shying away from 7550 to return to 7500 for the umpteenth time this week.
Though the Dow was down in the dumps, the dollar was broadly fine. It may have slipped half a percent against the yen, but it was up 0.3% against both the pound, with cable hitting a fresh 16 week nadir of $1.356, and the euro.
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