The
week was a challenging one for investors as global stocks ended the momentum
seen this year. In the past five days, the Shanghai Composite, S&P 500,
Nikkei, FTSE, and DAX have declined by 0.76%, 0.50%, 0.80%, 0.50%, and 0.92% respectively.
This article explains the key themes that investors were following through the
week.
US-China
Trade
On
Sunday, Donald Trump sent a tweet, saying that the US will impose a 25% tariff
on Chinese imports worth more than $200 billion. This was an unexpected tweet
because traders were initially expecting the two countries to seal a deal soon.
Throughout the week, investors continued to worry about an escalation of the
tensions. Yesterday, China’s Liu He arrived in Washington and held discussions
with Robert Lighthizer, Steve Mnuchin, and their teams. These talks are
scheduled to continue today but the tariffs are still expected to go on.
Uber
IPO
In
the IPO market, all eyes were in Wall Street, where Uber is expected to make a
debut in the public markets today. In the past few weeks, the company’s
executives have been on a roadshow explaining their business to investors.
Yesterday, it was revealed that the company will price its IPO at the lower end
of the range. It will be valued at more than $86 billion. This is much lower
than the $120 billion that was being expected by the market. Still, after
becoming public, the stock could jump by more than 30%. Its IPO has been
hampered by the weak performance of Lyft, its closest competitor.
Anadarko
Investors
also focused on Anadarko, the oil giant that is being taken over. A few weeks
ago, Chevron announced that it would acquire the company for $33 billion. A few
days later, Occidental announced that it would take over the company in a $38
billion deal supported by Warren Buffet. This week, Anadarko announced that it
would accept the Occidental deal, which was much more superior. At the same
time, it will have to pay Chevron a $1 billion break up fee.
Riksbank
and BOJ
This
week, investors got a chance to read the minutes from Riksbank. The Swedish
central bank released the minutes of the previous meeting. In the minutes, the
bank said that it would leave rates unchanged for a little longer. The minutes
also showed that the bank would start a SEK 45 billion in July. This decision
was opposed by some members of the committee.
The
Bank of Japan also released its minutes for the previous meeting. The minutes
showed that some members of the committee were cautious about the prolonged
period of low interest rates.
Geopolitics
There
were a few geopolitical issues this week. First, Iran announced that it would
suspend some parts of the JCPOA. At the same time, Washington sent a bomber
near the country’s waters. Second, North Korea tested a number of projectiles
after the breakdown of talks with the US. The US then captured the country’s
ship for violating sanctions. In South Africa, Cyril Ramaphosa won the election
but the ANC party continued being weakened.
The post Weekly Review: Tough Week for Markets as Trade Tensions Escalate appeared first on Forex.Info.