European shares slipped on Wednesday as investors’ sentiment has been slashed after a resurgence of tensions between Washington and Beijing overnight. Despite a stronger-than-expected US Retail Sales report yesterday, investors are now concerned a trade deal between the US and China is not going to happen anytime soon after President Trump said he could go ahead with further tariffs hike against Beijing. China retaliated almost instantly by appointing a new very hawkish member to its negotiation team, Zhong Shan, and showed signs the government was in no hurry to reach an agreement with the Trump’s administration and would prefer to wait for the 2020 election outcome. This is a very bad news for stock traders who were betting on a trade deal this summer.
However, it will give more space to other bullish leverages on stocks such as the FED’s monetary policy, as Jerome Powell recently confirmed the FOMC committee is still monitoring downside risks to the US Economy and will “act as appropriate” to sustain domestic markets.
Photo by Mika Baumeister.
In Europe, traders are also concerned about the recent turn in the race to become the next UK Prime Minister, as yesterday both candidates said they would be ready to not sign any deal with the European bloc. Boris Johnson also confirmed he would hold early general elections if he becomes the next PM, confirming the state of uncertainty in the UK. Apart from the SMI-20, every other EU benchmark is trading slightly lower this morning. DAX-30 and CAC-40 indices are little changed while the worst performance is being brought by the IBEX-35 in Madrid. The SMI-20 in Geneva is trading towards 9,880.0pts after a successful rebound registered over the 9,720.0 zone recently. Prices will have to clear the 9,900.0pts price level in order to continue the road to 10,000.0 pts.
