Trade tensions up

China responded to President Trump’s plans to impose a 10% tariff on more Chinese goods by allowing the yuan to weaken 1.43% to 7.07 against the dollar this morning. Continuing US-China trade tensions and the escalating violence in Hong Kong depressed markets globally, with the Hang Seng falling 3%. Tech stocks suffered in particular, with the Nasdaq down 1.32%, while the S&P500 had its worst week so far this year, with potential for more downside.

Investors fleeing for safe havens

European markets were all down on trade fears, as investors headed for the bond markets. The 10-Year government bond yields fell to all-time lows, with Germany at -0.488%, Netherlands -0.376% and France -0.256%.

The FTSE was down 1.29%, and sterling gained up to 1.22 against the dollar, on increasing speculation that Prime Minister Boris Johnson is planning for a snap election after taking the UK out of the EU on October 31st, which investors are hoping may bring an end to the ongoing Brexit saga.

Gold bucked the trend by increasing to a 6-year high of $1,453, as central banks bought a record amounts on persisting global trade tensions. Crude fell to $55/barrel on shrinking global demand.

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