The fear of a full-blown trade war is now the single most important factor for the direction on global financial markets, according to analysts at Danske Bank.
Key Quotes
“Importantly, yesterday we got the first indication albeit small that the Trump administration is not immune to the bearish market sentiment that pushed Nasdaq down more than 2.2 % yesterday.”
“White House trade adviser Peter Navarro said on CNBC that a Treasury Department to be published later in the week on American restrictions on foreign investments will not be as damaging to growth as markets are anticipating. Navarro underlined that ‘there are no plans to impose investment restrictions on any countries that are interfering in any way with our country. This is not the plan the whole idea that we’re putting investment restrictions on the world please discount that all we’re doing here with the president’s trade policy is trying to defend our technology when it may be threatened’.”
“However, we doubt that the words from Navarro will be enough to calm market fears. China and the EU yesterday raised concerns that the protectionism risks pushing the world economy into recession and Harley Davidson said it would move some production out of the US to avoid new EU tariffs on its motorcycles.’
“Note that earlier in the day, Treasury Secretary Steven Mnuchin had tweeted indicating that the administration would not focus its restriction efforts solely on China but on all countries. In addition, White House Press Secretary Sarah Sanders pointed in that direction.”
Share
