Equity markets extend losses after trade tensions escalate

Summary:

• No trade agreement reached during the talks in Washington; China will raise tariffs on 5000 US goods from the 1st of June
• Wall Street sinks as China responds to US tariffs
• Equity markets are still under pressure
• BITCOIN price soars over the weekend

Moods on the global equity markets are sour on Monday and there are good reasons for it. Trade tensions continue to pressure stock valuations all over the world and recent developments do not bode well for the future either. In turn, all three major stock market indices from Wall Street opened lower on the first trading day of the week. The cause of this situation is no solution to the ongoing US-China trade conflict was found over the weekend and a streak of tweets from Donald Trump on Monday morning hinted that the United States are not backing down. The US President warned China not to retaliate or it will get worse.

It’s worth to see that China announced it will impose tariffs on 5000 US products worth a total of $60 billion. Tariff rates will vary by product and fall into 5-25% range. Full list of US goods is yet to be disclosed but what we know now is that tariff on LNG imports will increase from 10% to 25%. However, according to tweet from Global Times’ Hu Xijin products target may include those of the US major exporters like Boeing (BA.US), Caterpillar (CAT.US), NVIDIA (NVDA.US) or Intel (INTC.US). Having said that, those companies enjoyed elevated volatility on today’s session.

The European session started a little better, but moods on the global equity markets don’t let the stock markets on the Old Continent regain losses from the previous days. At the end of the day, the bulk of the European blue chips indices turned lower which is consistent with the sentiment on Wall Street. One of the biggest laggards was ThyssenKrupp (TKA.DE) which was the worst performing DAX stock today after over +26% jump on Friday.

On the cryptocurrencies market, the Bitcoin rally continues unabated. Last week the price broke the key level of $6000 and over the weekend it literally skyrocketed reaching nearly $7500 at one point. Bitcoin is up 33% in May alone, up 93% so far this year and up 125% from December lows. Concerns about yuan depreciation are seen as one of the reasons behind the Bitcoin rally.