Trade tensions take their toll

The last thing the world needs right now is rising tensions between the world's largest economies but that's what we're being treated to and it's already taking its toll.

In many ways, the crisis has brought people and communities closer together but unfortunately the same cannot be said of the world's leaders. China has been questioned for its handling of the early stages of the crisis by many at this point but there has been no harsher critic that the Trump administration, in particular the President himself.

It's worth noting that Trump is fighting an election in six months so it's very much in his interest to push all blame for the sky high death toll onto Beijing. It's going to be a hard enough task retaining the White House in the midst of a severe economic slump; if he can't convince the public that his administrations handling of the crisis isn't to blame, what seemed unthinkable six months ago may well happen.

And so Beijing bashing is going to be the norm for another six months, while his team do everything in their power to stop the hard-earned trade deal collapsing around them like a Jenga stack. Easier said that done.

Of course, China is hardly innocent in all of this and will no doubt be relishing the prospect of a Trump-free White House. And to make matters worst, we're heading for more protests in Hong Kong - where stocks slid more than 5% overnight - after China moved to directly introduce security laws in Hong Kong, in response to last year's events. This once again puts them on a collision course with Washington due to the special status the region currently enjoys. Expect further hostility in the weeks and month's to come.

US-China tensions, Hong Kong protests and no-deal Brexit. It's 2019 all over again but much, much worse.

 

Oil's rally comes to an abrupt end

It's been a good run for oil prices but rising US-China tensions have proven a step too far. Crude is off more than 5% to end the week and heading for an interesting test around $30 in WTI. If this can hold, it could reinvigorate the rally while a break could cast real doubt once again.

The oil dynamics have undoubtedly improved and it passed the June expiry test with flying colours. But the outlook is still highly uncertain and numerous risks lie on the horizon, even before you taken recent tensions into consideration. There'll be nothing normal or straightforward about this recovery.

 

Gold may struggle as tensions rise

Gold came under some real pressure on Thursay before finding support around $1,715. The rebound today may provide some encouragement but I'm not sold. May has been kind to the yellow metal but there are so many factors driving it that it makes it difficult to predict.

Tensions between the US and China will likely weigh on the yellow metal, with traders typically favouring the greenback in this scenario. Both are making decent gains today but gold remains some way off yesterday's open. If it falls short, it could find itself under pressure again early next week.

 

Bitcoin's fading enthusiasm

Bitcoin is holding around $9,000 but has dipped below here a couple of times over the last couple of days. It came under heavy selling on Thursday as bulls gave up the battle of $10,000 and now $8,000 looks more likely. A break of this would be very bearish and bring an abrupt end to bitcoin's halving enthusiasm.