Stock Markets edged lower on Thursday as global trade concerns continued to mount amid reports that trade negotiations between the U.S. and China have once again faltered over restrictions on Chinese telecommunications giant Huawei. This disappointing news of another stall comes just two days after President Trump on Tuesday made sceptical comments about the possibility of a resolution to the year-long trade war.
A Vicious Cycle
China is very insistent on its demands towards the US and the US is not willing to give in as it appears, which is why the trade talks have once again stalled and the vicious trade war cycle may repeat itself again. This would include the US upping pressure on China and stock markets selling off in risk-off movements, much like what we see this morning but potentially much stronger.
Investors Focus on Corporate Earnings
European stocks started the day lower into this Thursday, as market participants focus on fresh corporate results and keep an eye on the US/China trade spat. US stock futures also pointed to a bearish open today. Swatch, Royal Mail, UnitedHealth and Microsoft are amid today’s biggest reporting companies.
The U.S. to Send More Troops to Iran
The Trump administration is preparing to send 500 US troops to Saudi Arabia, bolstering the military relationship between the US and the kingdom amid rising tensions with Iran. The deployment plan comes as the U.S. responds to a spat which began by the downing of a US drone by Iran in the region. The US also announced it would deploy 1,000 troops in the region after an attack on two oil tankers in the Gulf of Oman that the US blames on Iran, but Iran denies involvement in. Iran has responded to the mounting pressure by the U.S. with warnings that it could close the street of Hormoz if needed, even though it doesn’t want to.
Forex Preview: USD Slides
The USD gave a lot of its strength back and is looking weak this morning, giving room for safe-haven currencies such as the JPY and CHF to rise amid the broader risk aversion. The EUR is meanwhile en route to re-test the 1.1270 again and we could see a possible break of that level upwards. The AUD bounced back strongly to a very decisive level around the 0.7034 and may extend further from here.
Gold Prices Set to Edge Higher
Elsewhere, gold prices pulled back from a two-week high to trade flat this morning as investors sought to cash in their gains. XAU/USD could break higher as investors shy away from riskier assets and as the USD continues to lose steam.
Oil Prices Stable, BTC Recovers
Oil prices also steadied after falling in the previous session when official data showed U.S. stockpiles of products like gasoline rising sharply last week. Meanwhile, bitcoin averted a steeper drop and is now trading above the 9,5k level with the 10k as the most important level to conquer ahead if it wants to switch back to bullish sentiment.
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