The risks of a trade war are back
After the G20 summit in Japan, the two conflicting parties stated that they were ready to return to the negotiating table. The market received a significant reason for the growth of optimism against this background, which supported, first of all, risky assets and lowered concerns about the risks of a trade war.
US and China return to the negotiating table
After almost a month after the G20 summit and after the announcement of new trade talks between the US and China, there was not a single high-level official meeting. Moreover, besides the general stress relief in the market, there was no longer any practical influence from these statements.
Situation now
The US – China trade relations have not changed after nearly a month. From the US side, D. Trump said that he was in no hurry to resolve the trade conflict with China. In addition, he added that tariffs for Chinese products began to influence the economy of China.
China, during a lull, received support from the WTO (World Trade Organization) in a dispute over tariff tariffs of the United States for another 2012. They were recognized by the WTO as illegal and contrary to its rules. It actually untied the hands of China in a trade war against the United States.
In response, the US reacted with criticism, calling the decision not legal and creating the threat of a collapse of the WTO. In fact, the United States maintained a tough stance on China. But most importantly, it was made clear that the US – China negotiations will not take place in the form that the market expected.
Further concerns
New risks of a slowdown in the global economy were exposed despite the fact that tension in the US and Chinese trade wars was actually preserved. Thus, the risks of BREXIT and the statements of Boris Johnson, one of the main candidates for the post of British Prime Minister, that he will take Britain out the EU at any cost threaten not only the UK economy, but also Europe as a whole.
The ECB is already beginning to respond to such risks with softer rhetoric in the eurozone monetary policy, preparing for new incentives in the face of tough Brexit.
The US Fed also no longer conceals the possibility of stimulating the economy by the lowering key interest rates, indicating at least one of them already at the July meeting. In addition, there is the possibility of a more significant weakening of the US dollar on risks.
Against the background of the renewed risks of the US-Chinese trade war and the slowdown in the global economy, safe haven assets began to receive a significant support: gold, Japanese yen and the Swiss franc.
Anton Hanzenko