{"id":3580,"date":"2018-04-04T08:18:45","date_gmt":"2018-04-04T12:18:45","guid":{"rendered":"http:\/\/lifeinsurance-orleans.ca\/Life-Insurance-Blog\/?guid=48ec121c776e7a76885e6f752371d8c6"},"modified":"2018-04-04T08:18:45","modified_gmt":"2018-04-04T12:18:45","slug":"spectre-of-full-blown-trade-war-returns-to-wallop-world-markets","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2018\/04\/04\/spectre-of-full-blown-trade-war-returns-to-wallop-world-markets\/","title":{"rendered":"Spectre of full-blown trade war returns to wallop world markets"},"content":{"rendered":"<p>Fears of a trade war between the world\u2019s two largest economies returned to haunt markets on Wednesday, sending U.S. stock futures tumbling and sinking European and Asian equities. Treasuries climbed while the dollar was steady, and gold jumped.<\/p>\n<p>Hopes that Tuesday\u2019s gains in U.S. equity markets would lead to a more lasting rebound foundered as contracts for the S&amp;P 500, Nasdaq 100 and Dow all slumped alongside both the Stoxx Europe 600 Index and the MSCI Asia Pacific Index.<\/p>\n<p>The U.S. market had taken heart overnight from bets that President Donald Trump&#8217;s Twitter attacks on online retail giant Amazon would not translate into actual policy.<\/p>\n<ul class=\"related_links\">\n<li><a href=\"http:\/\/business.financialpost.com\/personal-finance\/the-bull-market-narrative-has-taken-a-dark-turn-but-has-anything-really-changed\">The bull market narrative has taken a dark turn, but has anything really changed?<\/a><\/li>\n<li><a href=\"http:\/\/business.financialpost.com\/news\/economy\/trump-is-said-to-push-for-initial-nafta-deal-peso-rebounds-2\">U.S. said to push for initial NAFTA deal by next week as global trade tensions escalate<\/a><\/li>\n<\/ul>\n<p>Yet trade worries were never far away. Late on Tuesday, the Trump administration announced 25 per cent tariffs on US$50 billion of annual imports from China, covering around 1,300 industrial technology, transport and medical products.<\/p>\n<div class=\"pmYTPlayerContainer video-container\">\n<div id=\"pn_video_386846\"><\/div>\n<\/div>\n<p><script type=\"text\/javascript\">( function() { pnLoadVideo( \"videos\", \"INflKJlk5LM\", \"pn_video_386846\", \"\", \"\", [] ); } )();<\/script><br \/>\nChina then responded within 11 hours with penalties on US$50 billion of U.S. goods ranging from soybeans, cars and chemicals to whisky, cigars and tobacco with its Vice Finance Minister stressing the country had never given in to external pressure.<\/p>\n<p>U.S. President Donald Trump denied early Wednesday that the United States was in a trade war with China.<\/p>\n<div class=\"embed-twitter\">\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!<\/p>\n<p>&mdash; Donald J. Trump (@realDonaldTrump) <a href=\"https:\/\/twitter.com\/realDonaldTrump\/status\/981492087328792577?ref_src=twsrc%5Etfw\">April 4, 2018<\/a><\/p>\n<\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/div>\n<p>But the moves triggered further heavy selling in global stock markets and commodities, with U.S. stock futures sliding 1.5 per cent, soybean futures plunging 3.7 per cent and the dollar and China&#8217;s yuan both hit.<\/p>\n<p>Europe&#8217;s reaction was sour, too, with London&#8217;s FTSE and Paris&#8217;s CAC40 down around 0.5 per cent, while the export-heavy German DAX was more than 1.3 per cent weaker as the nervousness spread.<\/p>\n<div id=\"attachment_1569472\" style=\"width: 650px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" loading=\"lazy\" data-attachment-id=\"1569472\" data-permalink=\"http:\/\/business.financialpost.com\/investing\/global-markets-shares-recoil-as-china-fires-back-in-u-s-trade-war\/attachment\/trade-22\/\" data-orig-file=\"http:\/\/wpmedia.business.financialpost.com\/2018\/04\/trade.jpg\" data-orig-size=\"1000,750\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"trade\" data-image-description=\"&lt;p&gt;U.S. President Donald Trump, left, and Chinese Finance Vice Minister Zhu Guangyao. China and the U.S. both imposed tariffs on each other\u2019s goods as trade tensions escalate. &lt;\/p&gt;\n\" data-medium-file=\"http:\/\/wpmedia.business.financialpost.com\/2018\/04\/trade.jpg?w=300\" data-large-file=\"http:\/\/wpmedia.business.financialpost.com\/2018\/04\/trade.jpg?w=640\" class=\"wp-image-1569472 size-large\" src=\"http:\/\/wpmedia.business.financialpost.com\/2018\/04\/trade.jpg?w=640&#038;h=480\" alt=\"\" width=\"640\" height=\"480\" srcset=\"http:\/\/wpmedia.business.financialpost.com\/2018\/04\/trade.jpg?w=640&amp;h=480 640w, http:\/\/wpmedia.business.financialpost.com\/2018\/04\/trade.jpg?w=150&amp;h=113 150w, http:\/\/wpmedia.business.financialpost.com\/2018\/04\/trade.jpg?w=300&amp;h=225 300w, http:\/\/wpmedia.business.financialpost.com\/2018\/04\/trade.jpg?w=768&amp;h=576 768w, http:\/\/wpmedia.business.financialpost.com\/2018\/04\/trade.jpg 1000w\" sizes=\"(max-width: 640px) 100vw, 640px\"><\/p>\n<p class=\"wp-caption-text\">U.S. President Donald Trump, left, and Chinese Finance Vice Minister Zhu Guangyao. China and the U.S. both imposed tariffs on each other\u2019s goods as trade tensions escalate.<\/p>\n<\/div>\n<p>&#8220;The market should be focused on it because it&#8217;s bad news,&#8221; said fund manager Ashmore&#8217;s head of research Jan Dehn.<\/p>\n<p>&#8220;It (U.S. protectionist measures) is the policy equivalent of peeing in your pants to keep warm. In the short term it gives you a fuzzy feeling but in the long term, nothing good is going to come of it.&#8221;<\/p>\n<p>The swing in risk sentiment put the pep back into bonds, with yields on U.S. 10-year Treasury debt down two basis points at 2.76 per cent.<\/p>\n<p>Borrowing costs nudged lower in Europe too even as the first March reading on eurozone inflation, a key release for markets as the European Central Bank looks to wind down its massive monetary stimulus, came in firm at 1.4 per cent.<\/p>\n<p>Markets have been buffeted in recent weeks by everything from a volatility spike and a tech selloff to fears of an all-out trade war, and developments on Wednesday suggest there may be more turbulence to come. Investors are having to weigh the growing protectionist rhetoric between the U.S. and China against the chances of measures having a meaningful effect on the still-upbeat global growth picture.<\/p>\n<p>\u201cTrade uncertainty is the main headwind to the market,\u201d Charles St-Arnaud, an investment strategist at Lombard Odier Asset Management in London, said by phone. \u201cAt this juncture we need to be careful. The macro picture hasn\u2019t changed massively yet. Growth remains robust, unless we go into a bigger trade war.\u201d<\/p>\n<p>The rising trade rhetoric saw the dollar buckle to 106.16 yen, after edging up from a low of 105.70 on Tuesday. The euro hovered at US$1.2296, after easing from a top of US$1.2335 overnight, while the dollar index was 0.2 per cent lower at 90.<\/p>\n<p>The Mexican peso and Canadian dollar both held firm after hitting a nearly five-month and five-week highs respectively in recent day on growing optimism about the prospect of a NAFTA trade deal.<\/p>\n<p>Investors also seemed to be keeping their nerve on the global economic outlook after a host of manufacturing surveys (PMIs) showed some slowing, but from lofty levels in many regions.<\/p>\n<p>Activity in Japan&#8217;s service sector also grew at its slowest pace in 17 months last month, British shop prices dropped at the fastest pace in more than a year while Australian February building approvals fell 6.2 per cent.<\/p>\n<p>&#8220;If global PMIs slow and avoid overheating concerns, that is good for risk appetite. If they slow for &#8220;the wrong reasons&#8221; like trade protectionism, that is much more worrying,&#8221; said Deutsche Bank global strategist Alan Ruskin.<\/p>\n<p>&#8220;The March data is at the most a very early warning shot for policymakers not to get too complacent on global growth resilience,&#8221; he added.<\/p>\n<p>Trade wars were a particular concern for developing Asia, where South Korea, Taiwan, Thailand, China, Indonesia, and India reported a slowing in factory activity.<\/p>\n<p>In commodity markets, gold jumped 0.7 per cent to US$1,342 an ounce, recovering some of Tuesday&#8217;s losses.<\/p>\n<p>Oil prices slipped with Brent crude futures off 75 cents to US$67.38 a barrel, while U.S. crude fell 73 cents to US$62.78 a barrel.<\/p>\n<p><em>With files from Bloomberg and Reuters<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fears of a trade war between the world&rsquo;s two largest economies soar as China hits back with penalties on $50 billion of U.S. goods<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/3580"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=3580"}],"version-history":[{"count":3,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/3580\/revisions"}],"predecessor-version":[{"id":3626,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/3580\/revisions\/3626"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=3580"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=3580"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=3580"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}