It was one of those days defined by one single, market-shaking event, the kind that actually ended up being quite boring because of the rigidity of trading.
All that is to say little changed as Wednesday went on, Donald Trump’s threats to $200 million of Chinese imports keeping the markets a state of fear throughout the session. And while the Dow Jones didn’t fall quite as sharply as promised by its futures, the index still plunged 0.6% after the bell, taking it back below 24800 having hit 3 week peak on Tuesday.
The day’s losses were actually far worse in Europe. The DAX, perhaps spooked by the sniping between Trump and Angela Merkel, was the worst hit, the German index dropping 1.4%, with the CAC not too far behind with a 1.3% decline. The FTSE, meanwhile, was down 1.1%, just about keep above 7600 having crossed 7700 earlier in the week.
While the indices remained resolutely in the red, the forex markets completely flattened out as Wednesday progressed. The dollar, previously in the green as investors looked for a safe haven, shed its growth, reverting back to its starting positions against the pound and the euro.
Heading into Thursday and investors will be on high alert for a Chinese response, with any potential Beijing retaliation – or, equally, a lack of reaction – likely to be what drives trading in the second half of the week.
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