Global equity benchmarks are ripping back this morning as trade tensions have found a way into the back seat of investors’ minds. In fact, the small-cap and domestically focused Russell 2000 notched a record high on Monday, matched it yesterday and extended such gains in today’s session.
Risk-off sentiment is sweeping through global markets after U.S. President Trump fired back at China last night. He instructed the U.S trade representative to identify $200 billion worth of Chinese goods to impose a 10% tariff. Crude oil recovered very well yesterday as speculation mounted that OPEC will only raise production 300,000 to 600,000 bpd. However, this morning, crude oil is a casualty of the risk-off, trade war fears.
On Friday, the White House announced 25% tariffs on $50 billion worth of Chinese goods. As promised, China quickly retaliated imposing 25% tariffs on $50 billion worth of U.S goods. They plan to introduce these tariffs in two phases.
The coming week (June 18-22) should continue the trend of trending symbols. The only potential exceptions are gold and soybeans whose weekly pivots are sideways for reversal scalpers and who already made a wide-range move likely to consolidate sideways. However, both gold and beans have trending monthly pivots--a wild card working against my Iron Condor favorite trade.
The coming week will have some serious breakouts, blowouts, and wide ranges in prices, as well as continued “freight train-steamroller” trending behaviors. Gold is in a more extreme narrow range with strongly-trending monthly and inside weekly pivots more breakout-ish than last week as of Thursday. evening.
While President Trump has at times appeared friendly with certain other heads of state in the past, the relationships have at least appeared to have become more hostile since tariffs were imposed on the European Union, Canada and Mexico by the United States last week. The G7 meeting has become more like a G6+1, with Trump choosing to isolate the US on a number of issues from trade to Iran and climate change.