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Robert Carnell, Chief Economist Head of Research, Asia-Pacific at ING, notes that markets are responding with muted relief to the latest round in the trade saga but nothing has really changed.

On Tuesday, the USTR announced the delay of some US tariffs on certain Chinese goods from September to December.

Key Quotes:

“The delay on the introduction of tariffs on some of the $300bn of goods hit by the latest 10% levy, has been greeted by markets with a modest, but fairly muted cheer. It’s a stay of execution, not a pardon. And markets remain nervous.

Stock markets look a bit happier but are off their highs – I can live with that.  

But the things that might concern investors remain largely in place:  

  • Unrest in Hong Kong continues, and there is some talk of Mainland Chinese troops positioned outside the city – no knowing how reliable such reports are, or what they may portend if true, but it makes me extremely nervous.
  • Argentina’s  problems echo the causes of the last bout of EM risk aversion…there doesn’t have to be a causal link for investors to panic in different markets
  • The trade war is still on, and the latest delay seems self-serving for the US which can load up for the gift-giving season before tariffs stick up prices early next year.  “