Why are Financial Markets Worried About the Outcome of the Trade War?

Trade war that is occurring between the United States and China have kept financial markets uncertain, due to the trade negotiations, with European stocks attempting to copy their Asian financial colleagues and taking a step back from last session’s highs.

Overnight on Wall Street, the Dow and S&P 500 managed to attain record-closing peaks with hopes of a peaceful settlement in order to finish the tariff war that has damaged financial markets all over the world.

The pan-European STOXX 600 started with down 0.4% at 405 points, 10 ticks from its April 2015 record of 415. S&P 500 futures withdrew 0.1% after the New York standard hit its highest closing level yesterday.

“The trade deal is the predominant driver,” for financial markets at the moment, stated by a  global equity strategist at Legal & General Investment Management. They explicitly announced that this morning’s lower levels in the market are just an involuntary response to the last news pieces on the US-China trade war.

The solemn mood counteracts with Thursday’s flow of glowing positive energy in global financial markets, regarding the news on the US-China trade war and trade negotiations on rolling back tariffs as a form of middle ground.

Changes in Prices and Currencies Were Held Back

The dollar was moving slowly at 109.32 yen, after attaining a high of five months with 109.49 the previous day.

The Euro was moving gradually at $1.1050, as was the dollar index unaffected at 98.154 after hitting a high of three weeks with 98.236 on Thursday.

A poll from Reuters claim that the upkeep of the Dollar will steadily move higher and remain in a stable position in the coming year.

The worries on the currency changes was due to the US-China trade war and the upcoming negotiations that will follow. The financial markets all over the world are unaware of how to handle the situation and where their position will lie in the next phase of the fiscal year.

The financial markets in Europe have been mimicking the steps of their Asian peers in order to keep a safe distance from the trade war, and the financial losses and risks that could follow them. Most financial and trading providers are holding their breath until the predictions of the trade war are sustained and analyzed correctly.

As a trader, it is advised to make reasonable and “safe” bets on the financial markets until this worrisome catastrophe maintains itself.