Daily reviews


Global stocks mixed, dollar on the offensive, investors closely monitor trade developments


Heightened trade-related uncertainty unnerved investors after Trump tweeted that the US will hike tariffs on $250 billion worth of Chinese goods to 30% from 25% while tariffs on another $300 billion in Chinese products will also go up to 15% from 10%.

  • Investor sentiment improved towards the end of the week
  • Inversion in the US yield curve continues to unnerve investors
  • US and China show readiness for resuming the dialogue
  • Dollar gains across the board on easing trade tensions
  • Brent crude was mostly higher amid a better sentiment

Asian equities

Heightened trade-related uncertainty unnerved investors after Trump tweeted that the US will hike tariffs on $250 billion worth of Chinese goods to 30% from 25% while tariffs on another $300 billion in Chinese products will also go up to 15% from 10%. But on Monday, the US leader said that Beijing called US negotiators to say they wanted to negotiate, which have calmed markets somehow but it didn’t help the indices to turn positive at the start of the week. Then, China announced measures aimed at raising consumption, including a potential removal of restrictions on car purchases. This step helped to ease the downside pressure on high-yielding assets though risk aversion was still in place amid heightened trade-related uncertainty and yield curve inversion. The spread between the 10-year Treasury yield and the 2-year rate declined to -5 basis points, its lowest level since 2007, which investors take as a sign of an impending recession.

Later in the week, stocks managed to rebound and registered one-week highs on Friday amid signals that the US and China returned to the negotiating table to resolve their tariff dispute. the sentiment has improved after Donald Trump said some trade discussions were taking place with China, with more talks scheduled. In addition, the Chinese yuan snapped a 10-day losing streak. Against this backdrop, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1% to the highest since August 23. Japan’s Nikkei jumped 1.2% while South Korea’s Kospi index gained 1.7% and Australian shares were 0.9% higher.

US equities

US stocks rose early in the week, with major indexes bounced following a sharp sell-off in the prior session, after Trump said about a possible trade deal with China and somewhat cooled investor concerns. Later, shares got a lift the energy sector amid higher oil prices. At the same time, the bullish sentiment was kept in check as U.S. yield curve inverted further, exacerbating fears of an upcoming recession.

China’s Foreign Ministry said later in the week that U.S. and Chinese negotiators were maintaining effective communication as the two countries try to strike a trade deal. Earlier, the Chinese Ministry of Commerce hinted Beijing will not escalate the trade war, while Trump said that some trade discussions had taken place already. On Friday, the Dow Jones Industrial Average closed 41.03 points higher, or 0.1% at 26,403.28. The S&P 500 ended the day just above the flatline at 2,926.46 while the Nasdaq Composite slipped 0.1% to 7,962.88. in August, as trade tensions intensified, the major US indexes posted their worst monthly performance since May. The Dow fell 1.7%, the S&P 500 lost 1.8% while the Nasdaq declined 2.6%.


The greenback rose against major rivals, in part due to signs of a positive turn in the US-China relations, somehow calming earlier fears of a full out war between the two world’s largest economies after Trump said he will resume talks with Beijing. In particular, the US currency rallied on the news that China called the US to restart trade talks and managed to hold its gains through the whole week. Also, China hinted that it won’t retaliate to new U.S. tariffs which calmed down fears of a major damage to the country’s economy.

Some economic data also supported the USD bulls. In particular, durable goods orders jump in July, boosted by Boeing order, US house prices rose in June, albeit at a slower pace. US consumer spending increased solidly, while Chicago business barometer rose to 50.4 in August, up from 44.4 in July. Meanwhile, gross domestic product increased at a 2.0% annualized rate in the second quarter, which was a downward revision from the 2.1% pace estimated last month, but the strongest consumer spending in 4-1/2 years managed to ease recession fears.

As such, EURUSD plunged below 1.10 for the first time in over two years and finished the week below the important psychological level which served as a strong support area before. The pound also declined amid Brexit-related developments. In particular, the queen approved the UK government’s request to suspend parliament during crucial Brexit period, which increased the probability that a no-deal Brexit will occur. As a result, GBPUSD dipped to weekly lows around 1.2140 after earlier failed attempts to challenge the 1.23 handle.


After four days of gains, Brent crude gave up some gains on Friday but managed to post the weekly gains due to a decline in US stockpiles, a looming hurricane in Florida and an easing of US-China trade tensions. Falling crude oil inventories along with high OPEC+ compliance indicate a balancing market, while concerns over a slowdown in economic growth and the impact on oil demand amid the ongoing trade war between the world’s two biggest economies continue to keep a lid on price gains.

According to the official EIA data, US crude stocks dropped by 10 million barrels to their lowest since October, while gasoline and distillate stocks each fell by over 2 million barrels. However, the positive market reaction was limited by the news that US production rebounded to a weekly record of 12.5 million barrels per day. Oil prices were sharply lower on Friday as dollar accelerated the rally, with month-end flows along with profit-taking sent Brent into the negative territory. Prices registered a weekly high of $60.60 but around $59, while a weekly low was set at $57.80 earlier in the week.