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.
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