Trade War Causes Asian Shares to Stumble

August 12, 2019 | Monday



On Monday, yen and bond bulls charges, on the other hand, stocks grappled again. And this was due to increasing worries on the prolonged U.S.-China trade war and damaging Brexit might tip-top economies into recession..

Aside from that, Europe's early gains for its main bourses vanished quickly. And Wall Street futures are in the red following the close of Asia-Pacific in lower level overnight.

Moreover, these results came despite an over 1% surge for Chinese stocks after the yuan averted additional drama. Then, financial regulators on Friday had eased margin financing rules. Meanwhile, the Japanese yen reached its highest in almost a year and a half at 105.32 yen against the dollar. Also, it gained against the euro and Brexit-bruised British pound too.

Currency strategist Esther Reichelt stated, "Risk indicators and global markets have become more shaky. And the yen is reflecting those concerns. She also added, "Safe-haven shelters like the yen and the Swiss franc should continue to benefit."

Bond Markets Meanwhile, the demand for guaranteed income in bond markets was unrelenting. Then, a rally in the debt of Italy gave it an extra boost. It was after Fitch kept the country's rating firm amid the prospect of snap elections in the euro zone's third-biggest economy now approaching.

Furthermore, there were hints that League leader Matteo Salvini's call for those snap election was experiencing mounting resistance from other parties. And these parties' support is vital for the plan to succeed.

Strategist Sebastian Fellecher said, "Fitch kept Italy's rating unchanged. And some market participants may be betting that a snap election could be delayed." This week, economists are also waiting for a batch of global data. And during the weekend, Goldman Sachs recently cut its U.S. growth forecast. And a warning that an agreement between the U.S. and China is unlikely to happen before the 2020 U.S. presidential election.


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