Stock Markets throughout the world have been on a roller-coaster ride in recent few weeks as fears around trade tensions between the U.S. and other major economies escalate. The prolonged trade war wind is still blowing in Global market.
The equity market will remain irregular until trade dilemmas recede and global growth momentum bottoms. But recent Fed and ECB decision came as the current US economy growing good and Fundamentals are pretty good.
In the current scenario, trade policy seems to be a political trade war, the prolonged issues between the US economy and other economies especially China now became the war of word.
let's take a quick look at the recent news.:
Well if one is searching for current news which is currently blowing over wall street that is " Trade war". On few weeks before it was showing some positive news. But the situation has changed when president Trump continues to impose the tariff on Chinese product. U.S. intention to place a 25% tariffs on $50 billion worth of Chinese imports, including aerospace, information and communication technology, and machinery. The day after the tariff escalated to $100 billion. The investor reacted very quickly on this issue and the US equity market downturn started. Following Trump's announcement, China rolled out retaliatory tariffs on $50 billion worth of US goods and promised to stand firm against the US's actions. Trump also threatened to hit China with a third wave of tariffs, an additional 10% on another $200 billion worth of Chinese goods, if China hit back with their own tariffs.
large scale Industrial sectors are getting affected due to the prolonged issue which currently turned into the tit-for-tat spat between the U.S. and its trade partners China.
Tariff on European and Canadian aluminium and steel, along with the threat of retaliatory tariffs from Europe on U.S. products also added the pain on US Equity market. It seems that a protectionist measure which is currently becoming the headwind of the stock market is now reflecting additional tariffs on European cars.
Opec meeting :
The most positive news one was Opec meeting in Viena on 22nd June. OPEC ministers announced a deal that will increase oil supplies from the producer group, which has been capping output in order to balance the market and boost prices for the last 18 months. The agreement came after a week of tense negotiation at OPEC's headquarters in Vienna. Top OPEC producer Saudi Arabia faced the challenge of convincing a handful of reluctant producers including Iran, Iraq and Venezuela to support an output hike. The output came from OPEC meeting boosted up the Energy sector and helped to come out the prolonged tumbling.
The energy sector has been underperforming for the past one month and is down by 5.23% as compared to the benchmark index S&P 500 of +1.36%. So the outcome of this meet was very important as this will drive the energy sector stock.
Much positive news still remains to boost up the US equity market. But investors and trader are giving more concerns on the tariff war. Economists and experts have raised concern that tariffs may slow down the U.S. economy. Now 2nd quarter earnings will start to roll out. So the question will the recent news effect on the result or the GDP will increase because of the president's tax plan and the president's regulatory relief ?
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