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September, 2018 6:51 AM



Trade Threats, WTO and Markets

Trade Threats, WTO and Markets

Comments on the market reaction to the latest global trade developments...

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31.08.2018 12:22 PM

Comments on the market reaction to the latest global trade developments:

“This [Trump administration threat to withdraw from WTO] is not the first time have heard this threat and the tariffs on the next $200 billion tranche of tariffs have been largely foreshadowed. This doesn’t make it easier for the market to digest and I’d expect this to dampen sentiment across the APAC region today. The stronger U.S. is the biggest near term challenge for Asian markets. The greenback has been in decline for the last couple of weeks, but may start to rise again on political uncertainty, and its been politics that has driven the U.S. dollar rather than growth or interest rate differentials.

Further on WTO, so far the U.S. actions on trade have been contained within the legal framework and targeted at specific sectors. Exiting the WTO would take things to the next level, and while the U.S. administration may believe that it would grant them increased flexibility on setting tariffs, it would also potentially expose them to higher import prices and leave the country without a resolution mechanism to settle disputes. 

Investors should take the escalation in rising trade tensions seriously, but also recognise than any signs that tensions are easing can lead to markets upside and that the reaction to these big trade related headlines has been relatively short lived. Political developments and trade will continue to dominate the agenda for investors for next few months.”

Published by Kerry Craig, Global Market Strategist, J.P. Morgan Asset Management
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