The world, and we all, expected everything to be fixed as a result of the G20 summit. After President Trump and President Xi sat down for talks and came out with promises of a three-month suspension on Us imposed Tariffs, the world breathed a breath of fresh air. The thinking at the time was that the markets would bounce back as the investors felt more confident in the stocks.
Unfortunately, that was not the case.
Tariffs hurting Trade
With the most recent tweet US president Trump reiterated that he remains a “Tariff Guy”, the market lost all of the vitality the previous G20 summit news had inspired. The day was a quite unsuccessful one for the market as a whole as the DOW lost more than three per cent in its value. The S&P followed suit, losing more than three per cent as well. CAT, the industrial bellwether, was the one which performed the worst, sliding more than 6% in a single day. We see little to no confidence in the market at the close on Tuesday.
It seems that the US-China trade policies are negatively affecting the market, causing a rather unpleasant upheaval within the minds of all investors. This type of market volatility has been a trend over the past months. With investors unable to make any specific predictions regarding the direction that the trading policies of the current administration will go, there is little to no confidence in certain sectors of the trading. The sector hit especially hard is the one where most of the technical trading is done.
Looking towards the future
Even despite the 90-day extension to the solutions discussion granted by the US president to China, the threat seems too great for some investors. It seems that most see the looming threat as more of an inevitability, possibly expecting the tariffs to go into effect. It seems that investors have little faith in President Trump, which is causing them to refrain from engaging the market heavily.
The technical trading is happening especially hard. This sector is usually dominated by the current headlines and beliefs of the industry. With the United States tariffs being mainly directed at the tech industry, investors are seemingly more than discouraged to see value in tech stocks. Without China specifically confirming the trade war agreement and deals, the investors refuse to commit to tech trading.
What is even more dangerous is that the continuation of such market trends affects the entirety of the US economy. The result is that the bond market was showing traces of a recession for the first time in years. A dangerous situation for the world and the US.
Still, hopes remain that the US-China trade war will be coming to a slow when China confirms the deal recently boasted by President Trump. With the market closed on Wednesday in observance of the mourning day for the funeral of Us ex-president George HW Bush, we have more than enough time to fret over what comes next.