- Sterling up as much as 0.9% on Brexit secretary’s comments after Friday’s sell-off
- Latest tariffs in US-China trade dispute are implemented
- Crude oil prices hit four-year high
- UK factory orders weaken amid no-deal fears
Back to the US-China trade dispute, which has moved closer to becoming a global trade war with the implementation of the latest tariffs today.
Geoffrey Yu, head of UK investment office at UBS Wealth Management, said:
Today marks the latest step in the simmering US-China trade spat, as we see the Trump administration’s new tariffs on an additional $200bn of Chinese exports take effect. This clearly represents a further escalation of the threat to China and its economy, and, especially considering that China has scrapped plans for further trade talks, we expect things will get worse before it gets better. As we inch further towards the precipice of a fully-fledged global trade war, financial markets will no doubt react swiftly, looking for further downside.
However, the narrow focus on Sino-US relations is obscuring consideration of how an emerging trade tariff war could stimulate a fiscal drive from China. With a reasoned domestic response, what currently seems a damning situation could actually spark a re-orientation of China’s economic model. Granted, the leadership will have to accept short-term sufferance, but over the medium- to long-term, we see the potential for positive surprises.
Sterling has risen as much as 0.9% against the dollar to $1.3161, and 0.4% against the euro to 89.42p.