Investors reach trade war breaking point

Heading into the close, the FTSE 100 is down 120 points, while US markets dive firmly into the red.

• Trade war patience finally snaps
• No clear end-game in sight
• WeWork picks its moment to launch IPO 

The market it seems has finally lost patience with the president. Yesterday’s rally is but a memory, as indices across the US and Europe go deep into the red. What had seemed so promising 24 hours ago has been ‘trumped’ by the yield curve inversion and poor economic data from Germany and China. Investors continue to pull money from equity funds, with the move exacerbated by the selling on inversion headlines. Hopes of a US-China deal appear to have faded entirely, which may require some additional re-rating on equities, especially since the conflict appears to be feeding into economic data in a substantial way. Europe is leading the way down, but US equities are no longer immune it seems.
 Perhaps the big worry is that there seems to be no over-arching plan behind the president’s actions – if there was a plan, with a definable end-game, then investors might be prepared to be patient, but the Trump administration’s ad-hoc approach suggests the chaos will continue, and points towards an absence of global coordination to any sustained downturn, since the US is busily burning its bridges with key trading partners. 

WeWork’s plan to go public has been met with amazement, and is potentially the moment when the mantra of revenue growth over actual profit is tested to destruction. The timing of the news, on a day when Uber touches a post-IPO low, could not be better, but even a much more conservative valuation would still seem to underestimate the scale of the hole that the office company is digging. The move to list appears to be driven by concerns that stock markets will suffer in 2020, but if they do, such expensively-priced firms as WeWork and Uber will not be immune.