The intensifying trade tensions between the United States and China simply added to market jitters, consequently weighing heavily on emerging markets. While the prospect of higher U.S. interest rates is likely to stimulate fears of capital outflows from emerging markets, global trade concerns present a major risk.
Trade war fears are escalating after President Donald Trump hit back against the Chinese by asking his administration to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10%. This came after markets started to shake off concerns about the United States imposing a 25% tariff on up to $50 billion of Chinese products.
Crude oil prices got hit hard as the trade war for oil traders got personal. In a tit for tat, the Chinese government announced tariffs on U.S. oil imports as well as other energy products, in a sector that U.S. President Donald Trump promised to make great again. This along with the fact that most people believe that OPEC and Russia will decide to increase oil output even after reports that Bloomberg says that Iran, Iraq and Venezuela will veto the increase.
Singapore will be considered as the capital of the world for at least the early part of this week. The unprecedented summit between U.S. President Donald Trump and North Korean leader Kim Jong-un in Singapore is considered a major event in the financial markets and we can expect that it will be closely monitored by investors around the globe.
After imposing tariffs on steel and aluminum imports on its closest allies, the U.S. will be facing enormous criticism at the G7 summit on Friday in Quebec or, as the French Finance Minister Bruno Le Maire likes to call it, “G6 plus one.”
Crude oil prices are under pressure after Present Donald Trump took away some of the growing optimism of a United States/Chinese trade deal, along with some non-sourced OPEC talk about raising oil production at their next June meeting and weaker than expected manufacturing data in Europe.