Market sentiment dampened on trade deal fears

8 November, 2019

Despite the strength that markets had been showing earlier this week on the optimism about the trade deal between U.S. and China, fears of the deal failure appeared and began to affect trading sentiment on Friday.

The hopes of tariffs being rolled back in stages was followed by White House spokesperson saying she was optimistic a deal would be reached very soon, thus fueling a Thursday rally. But with little data to react to on Friday, clearly the overriding concern for the market is that talks break down at some point.

The unresolved situation between two largest global economies has already forced the EC to slash growth estimates for this year and the next one, as the EU is also facing uncertainties with the UK’s possible withdrawal.

China shows better trade numbers


China’s imports and exports improved in October, beating the expectations of 8.9% decline for imports and 3.9% decline for exports. Imports fell 6.4% whereas exports fell 0.9% YoY.

Despite the positive report, observers expect exports to be kept lower by slow global growth, unless the current round of trade talks bear fruit.

Domestically, the government is discussing options for combining banks. Lenders smaller than $14bn would be urged to merge or restructure, according to insiders. Meanwhile, existing shareholders would be compelled to buy perpetual bonds to cover potential losses.


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