Cash flows are running away from risky assets under the drums of war

Several hours remain until European markets open, with early indications of European futures indicating a cautious, flat start at this stage. Following yesterday’s “healthy” sell-off at the US indices and the subsequent Asian ones, today we will expect Europeans to react a little more reluctantly to events.

Yes, Trump is escalating one trade front, but with Argentina and Brazil. China was threatened to raise tariffs if there was no deal, and China responded to the US after signing the Hong Kong law. They blocked access to ports of call for US warships and created a list of US citizens who would suffer financial penalties through the loss of diplomatic status and passports. US manufacturing data also came out disappointing.

But enough stories. The action today will again focus entirely on trade war. Cash flows today will be expected to remain rather focused on defensive assets: the yen, gold, the franc and bonds. A possible deeper outflow of stocks and cyclical instruments will only occur if the situation worsens, and today we will expect a turn of events. The US dollar remains weak, the euro is trading higher, the Australian dollar remains strongest after the RBA has kept interest rates low.

 Trader Martin Nikolov

Read more:
If you think, we can improve that section,
please comment. Your oppinion is imortant for us.
WARNING: Any news, opinions, research, data or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. Varchev Finance Ltd. expressly disclaims any liability for any lost principal or profits which may arise directly or indirectly from the use of or reliance on such information. Varchev Finance Ltd. may provide information, quotes, references and links to or from other sites and blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the sites, blogs or other sources of information.
Varchev Finance