Market Volatility Stocks, Concerns US-China Trade

Trade concerns between the U.S.-China trade war, had stock investors on edge in trading on Tuesday sending the Chinese currency to fall to a 10 year low.

The Chinese yuan fell to 6.9696 per dollar as traders speculated whether Beijing would let it slide to 7 per dollar or beyond. Hints by Beijing on possible economic stimulus to stabilize its stock markets saw Asian markets make modest gains.

The Shanghai Composite rose 1.0 percent after falling in trading earlier following the news that the U.S. had put restrictions on Chinese chipmaker Fujian Jinhua. The CSI 300 blue-chip rose 1.1 percent at the end of trading.

MSCI’s broadest index of Asia-Pacific share has lost so far this month 12 percent and is on track for its biggest October decline since 2008.

Japan’s Nikkei average gained 1.5 percent.

The dollar lifted futures prices on Wall Street climbing to a 2 ½ month high.

News reports, that President Donald Trump is ready to impose further tariffs on all Chinese imports if there is no progress at next month’s meeting between President Trump and China’s President Xi Jinping.

According to news reports Trump said that the new tariffs worth billions of dollars were ready to go, if there is a no deal, but thinks that a ‘great deal’ can be made with China.

Senior macro strategist at Rabobank, Teeuwe Mevissen said that he does not see any resolution any time soon on the trade war.

European Markets

While disappointing company results on European bourses from France and Italy saw investors treading cautiously, as the euro fell 01. Percent to 1.1352 to the dollar, near 10 week lows.

Disappointing Data Italy

Rising concerns that Italy’s coalition government will confront the European Commission over their spending fuelled the negativity in European markets. Data released showed that the domestic demand and trade flows for the third quarter showed that the Italian economy was at a stand-still. The government 10 year bond yield climbed 2.5 basis points at 3.36 percent.

Germany CDU Party Sustains Heavy Losses

Election results in the Hesse state in Germany on Sunday showed that Angela Merkels’ Christian Democratic Union party suffered heavy losses, falling 28 percent. Prompting Angela Merkel to announce that she would step down as Germany’s Chancellor when her term expires in 2021 and not seek re-election.

Commodities

West Texas Intermediate futures for crude fell to $66.13 or 1.4 percent per barrel.

Brent crude futures slipped 1.8 percent to $76.

The CBOE Global Markets volatility index or Wall Street’s “fear gauge”, was down, but had jumped as high as 27.86 points.

Cross assets strategist at Nomura Securities, Masanari Takada said that there is an increasing probability of global stocks turning to a bear market.

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