Markets will continue to focus on the US-Chinese trade war – Danske Bank

Analysts at Danske Bank point out that the Chinese government yesterday responded to the 10% tariff imposed by the US by announcing retaliatory tariffs of 10% on USD60bn worth of US goods.

Key Quotes

“Moreover, the Chinese Ministry of Commerce said that it has filed a complaint with the WTO over tariffs imposed by the US. In addition, China's Premier Li Keqiang said he will not let the currency devalue to stimulate exports. Hence, China's strategy right now appears to be to respond to US measures but without escalating tensions.”

“Risk markets seems to have shrugged off concerns about trade tensions and the rally in global equity markets has extended this morning led by Japanese and Chinese markets . The positive reaction in risk markets likely reflects that the actions from both the US and China have been less aggressive than initially feared. Markets will continue to focus on the US-Chinese trade war and there is clearly a risk that tension will escalate further.”