BELIZE CITY (PRWEB) August 29, 2019
August has been a very volatile month for stock markets around the world, and fear from recession is increasing every day. Whether it’s Jerome Powels’ hindrance in lowering the interest rates as Trump suggests or low earnings from retailers in Q1, there are many ominous signs that scare the markets. However, according to Speed Solutions LTD. experts, without a doubt, the number one fear factor in the markets today is the ongoing China-US trade war.
Global uncertainty
Every Tweet from POTUS regarding China makes the markets shake, and analysts are almost desperate from trying to anticipate what will Trump say next. Still, the fact that the markets climb after peaceful tweets means that there is still some optimism regarding a possible agreement between the two.
According to Speed Solutions LTD. trade experts, “There are many ways this can go. As traders and investors are starting to understand the tremendous potential of a collision between the world’s two largest economies. The two major markets that are most likely to be influenced by such a trade-war are forex and commodities. And if this intensifies, it’s possible that a head-to-head currency war will take place. If that would be the case, the USD and the Yuan are going to be the main “competitors”. Apart from them, gold should be the commodity that could be influenced the most. Not too long ago, after Trump tweeted on China, the reaction by the Chinese currency was that it tumbled to its lowest level in more than a decade.”
Industrial tiebreaker
The trade war affects all the market, but the stocks that are taking the most heat are industrial shares. These days, the trade war is still thought of as a temporary state that can be resolved in the near future, but if an agreement is off the table, consequences could be enormous. Today, China is basically the factory of the world, with its’ cheap and quality labor. If high tariffs continue, the manufacturers of the world will have to set up shop somewhere else.
According to Speed Solutions LTD. trade experts, “The reason industrial stocks (Dow) suffer the most is because the stocks that compose this index are directly related to the biggest U.S. manufacturing companies. When Trump orders American manufacturers to leave China, he immediately impacts the stocks of these companies.”
What’s next?
To borrow from The Clash “Should I stay (in the market) or should I go?” Speed Solutions LTD. trade experts: “ well, since I am not a fortune teller, all I can say is that it all depends on how far this current situation will escalate. Right now, we only see the so-called “new beginning” of an ongoing trade war, which refuses to slow down. However, much can happen in the G7 summit. We will have to wait a little bit longer so see where this thing is going and how it develops, but one thing is for sure: market volatility will be at its peak as long as this situation continues.”