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The markets have become increasingly concerned about an escalation of the US-China trade dispute, according to analysts at Nomura.

Key Quotes

“Of even greater concern than escalating trade friction is that the Trump administration in the US is distancing itself from the rules that have governed international trade and finance since the end of the Second World War and has begun to move to a diplomatic strategy that favors the US alone. Under the new global regime we would expect a reduction in both global trade and cross-border corporate activity.”

“There is also a risk that countries around the world will embark on a series of competitive currency devaluations in response to this. In Japan, too, we see a possibility of calls for the authorities to implement large-scale fiscal spending, in order to create demand, and to carry out substantial monetary easing at the same time, in an attempt to maintain economic growth.”