Switzer on Saturday

Why did stock markets virtually ignore the escalation of the trade war?

Founder and Publisher of the Switzer Super Report
Print This Post A A A

Friday Close
Change
Change %
Week Change %
Dow Jones
25,019.41
94.52
0.38%
2.30%
S&P 500
2,801.31
3.02
0.11%
1.50%
NASDAQ
7,825.98
2.06
0.03%
1.79%
ASX 200
6,268.40
0.10
0.00%
-0.06%
Data for week commencing 09 July 2018

One really important revelation from my years explaining stock market behaviour is that sometimes it can defy logic and sometimes there are multiple forces at work. And this week’s ignoring of the scary implications of Donald Trump’s escalation of the trade war rhetoric was a case in point. Last week, the $US34 billion US tariffs matched by a Chinese ‘return of serve’ didn’t bother the stock market.

Why? Well, both warring parties did what was expected so the factored-in principle applied. However, the upping of the Trump tariff ante to a threat of another $200 billion worth of tariffs on China, and the latter saying it would look at qualitative trade restriction measures, initially brought a negative response in Europe and then on Wall Street. However Asian markets ignored the apparent hotting up of the trade war.

Take a free trial to continue reading

Already have an account? Login to continue reading.

By proceeding you understand and agree to the site's terms and conditions