Weekly Stock Market Analysis 8 April – International Trade War saga continues

The week ending 8 April has been mainly categorised by the current international trade dispute between the USA and China, the world’s two most powerful economies. This was kicked off by Trump’s imposition of US import tariff rates on certain goods, such as steel and aluminium, which directly effect China. The latter have immediately countered by imposing tariffs of their own, but how is this effecting the markets? We have seen that each time one of the countries issues a new list of tariffs, the other country retaliates by imposing additional ones of their own. This has been going on for weeks, disrupting the peaceful upward trend we were accustomed to in 2017.

Fears that these tariffs could lead to a full blown international trade war between the two countries has pushed the markets down with every new issued treat, and back up whenever news these squabbles could be over emerges. This has created volatility in the markets around the globe, but this may not be as bad as it sounds. Volatility creates opportunity to get into the market at a better price, hence potential bargains to buy certain companies at a discount have arisen. On the other hand, Treasury Secretary Steven Mnuchin acknowledged there’s a level of risk that the China US trade dispute would erupt into a full blown global trade war, pushing the markets down into bear territory, something the majority of investors clearly don’t want.

Overall, this week, the S&P 500 went down 1.4 %, the Dow 0.7 % and the Nasdaq 2.1 %.


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