Trade is once again becoming the main concern of investors. Over the past few weeks, there was optimism that the United States and China would reach a “phase-1” trade agreement and sign it formally at a summit in Chile. However, this seems less likely now. For once, Chile has refused to host the event due to domestic political problems.
Moreover, China is still not making any big concessions to the demands of the US, and many suspect this is because China doesn’t trust Trump as a President and does not believe he will be re-elected next year. As a result, uncertainty in the markets is on the rise once again.
The US stock markets have already reacted negatively to this news and opened in the red today. The negative sentiment was also felt throughout the Asian and European stock markets, who also responded to the Federal Reserve’s announcement yesterday that there will likely be no more interest rate adjustments this year. Yesterday, the Fed cut rates by 25 points to prevent damage to the US economy.
Growth and inflation data from the eurozone was also pretty bad. Inflation across countries from the eurozone is either stuck or dropping, rather than growing. The GDP growth for the previous quarter was only 0.2%, indicating that the eurozone is in a very tight spot. Newly-elected ECB President Christine Lagarde will have quite a difficult task ahead if she wants to stabilize the region.
