Trump China threats set the tone for morning trade

Donald Trump’s renewed threats against China ahead of this week’s G20 summit have rattled European and Asian markets this morning but European indices are beginning to turn the corner and head towards positive territory on a mixture of encouraging company news and comments from ECB head Mario Draghi.

G20 will be key for a number of markets

Preparing the ground for the talks with his Chinese counterpart Xi Jinping this Saturday President Trump has laid out his threats. He plans to increase tariffs to 25% on $200 billion in Chinese-made goods if a deal is not reached and potentially bringing in tariffs on imports of iPhones and Macbooks made in China. While China is not budging on the tariff front – it is responding in kind to any US tariff increases– the country has been addressing the issue of opening up to foreign investments and companies. Recently American Express has been allowed to set up a card-clearing service in the country and German insurer Allianz became the first wholly foreign-owned insurance firm in China. A positive outcome of the US-China talks would not only help major tech companies – Apple shares dropped 2% overnight after Trump’s comments – but also commodities and commodity related industries, as China is a major global importer.

The meetings between G20 heads of state will be crucial for a number of other markets, not least oil. Crude prices are on the decline again with Brent crude slipping briefly below $60 as Saudi Arabia raised output to an all-time high in November. The two key G20 oil players, the US and Russia, are more likely work towards lower oil prices as the US is keen to see low oil prices that will protect domestic consumers while Russia wants to keep production high to maintain its oil revenue.

Euro struggles after Draghi comments

The euro strengthened against the pound but yielded some ground to the dollar after the head of the ECB Mario Draghi said the bank will proceed with plans to start phasing out its debt buying programme despite criticism that it is too soon for the declining Eurozone economy to lose its support.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.