Global Markets Reel as Trump Threatens to Reignite Global Trade War

Strategic Insights -

Global markets took a hit on [unknown date] as Donald Trump accused China of violating its tariff truce with America, threatening to reignite a global trade war between the world's two biggest economies. The S&P 500 index fell 1.1 per cent, while the tech-heavy Nasdaq Composite dropped 1.6 per cent. However, both indices were set to finish the month higher after a sharp rebound in equity prices following Trump's "liberation day" tariff announcements.

Key Takeaways:

  • The S&P 500 index was on track to rise about 5 per cent in May, with the Nasdaq Composite jumping 8.2 per cent, a sharp rebound from earlier losses.
  • Investors are divided on whether dollar weakness is likely to continue, with some predicting ongoing pressure on the dollar.
  • European stocks finished slightly up overall after a choppy day of trading, with the broad Stoxx Europe 600 index closing 0.1 per cent higher.
  • Government bond markets were little-changed at the end of a month dominated by selling of long-term debt, with US 10-year Treasury yields down modestly by lunchtime in New York.
  • Asian stocks fell sharply, with Hong Kong's Hang Seng index closing 1.2 per cent lower and South Korea's Kospi 200 index dropping 1 per cent.
  • Steve Englander, global head of G10 FX research at Standard Chartered, said, "Our baseline is ongoing pressure on the dollar... It's going to be hard for the dollar to bounce back."

Statistics:

  • The S&P 500 index fell 1.1 per cent.
  • The Nasdaq Composite dropped 1.6 per cent.
  • The S&P 500 was on track to rise about 5 per cent in May.
  • The Nasdaq Composite jumped 8.2 per cent in May.
  • US 10-year Treasury yields were down modestly by lunchtime in New York, having risen 0.25 percentage points since the beginning of May.
  • The 30-year Japanese yield reached a record high this month, climbing 0.27 per cent.
  • Hong Kong's Hang Seng index closed 1.2 per cent lower.
  • South Korea's Kospi 200 index dropped 1 per cent.
  • The Topix fell 0.4 per cent in Japan.
  • Mainland China's CSI 300 index closed 0.5 per cent lower.

Sources:

  • LSEG (London Stock Exchange Group)
  • Standard Chartered ( reference to Steve Englander, global head of G10 FX research)