Tariff talk sparks sell off

March 23, 2018

Quite a volatile night for markets as talk of US tariffs gains momentum, evoking a negative reaction from world stocks.

The Dow copped a hammering overnight as the possibility of a trade war with China escalated. Donald Trump has announced $60 billion worth of tariffs on Chinese imports into the US. The Dow peaked early in trading, hitting 24,788.63. From that point forward however, it was mainly bad news. The Dow dropped over 850 from that high, to plummet to lows of 23,928.63, with the Dow re-entering correction territory. It is not far off those lows, currently trading at 23,975.90. The Dow remains quite shaky at the moment, unsure which way it wants to head. The Dax was not immune to the sell-off either. After reaching session highs of 12,272.97 early it suffered the same fate as the Dow, tumbling 300 points to lows of 11,972.97. It has come off that low slightly, trading at 11,989.97.

The EUR/USD started the session well, climbing to highs of $1.23881. It dropped off after that point as the USD gained in strength. The pair fell to lows of $1.22838. It has partially recovered, trading at $1.23155. The GBP/USD spiked to a high of $1.42179 on the back of the BoE interest rate meeting. The pair then fell to lows of $1.40752 before recovering to its current trading level of $1.41095.

Looking at the day ahead and while eyes should be one upcoming data, the sell-off and repercussions from the tariff announcement will likely dominate headlines and market interest. Markets are looking quite shaky at the moment and we could see much more volatility throughout the day and overnight. Data set for publication today includes:

Japan – National Core CPI

China – CB Leading Index

UK – BoE Quarterly Bulletin, MPC Member Gertjan Vlieghe speaks

Canada – CPI, Retail & Core Retail Sales, Common, Median, Trimmed & Core CPIs

US – Durable & Core Durable Goods Orders, New Home Sales, FOMC Member Raphael Bostic speaks


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