Potential US-Europe Trade Flare-Up Adds More Misery To Already Sour Session

The mood of trading went from bad to worse on Wednesday, as a new US-led trade issue emerged to add an extra dose of sourness to the session’s sickly broth.

Just as Trump seemed to momentarily put to bed the market’s fears surrounding the US-China trade situation – the President tweeted that their deal was intact – a situation seems to be about to flare up between the States and Europe.

A report from Bloomberg suggests Washington is preparing £3.1 billion worth of tariffs on various exports – including ‘olives, beer, gin and trucks’ – from the UK, France, Germany and Spain as Trump continues to butt heads with the European Union.

It’s not the kind of thing investors want to hear given they are already panicking at the prospect of an increasingly likely covid-19 second wave – or extended first wave, in the case of the United States – around the world, and what that would mean for the global economy.

Doubling down on the day’s risk aversion, the FTSE sank 150 points, plunging under 6175 as it wiped out its gains from the first half of the week. The CAC, meanwhile, dipped below 4900 after falling 1.8%, with the DAX diving 285 points to 12260.

The Dow Jones is currently set to drop 0.9% when the bell rings on Wall Street, a decline that is far from the pronounced losses seen in Europe. Whether that fall speeds up as more US traders get involved, however, is another matter entirely.

"Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.

In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved."

Original Post