Comments by Morgan Asset Management on Tuesday pointed out that the US stock market has fallen sharply but has not yet fallen enough to require more attention from politicians, making the breakdown of the US-China trade negotiations impossible to resolve as soon as possible, and the market may become more volatile.
U.S. stock markets tumbled sharply on Monday, with the Dow. DJI and S&P 500. SPX down more than 2%, after China announced retaliatory tariff measures despite warnings from the U.S. government, the latest attack in an increasingly fierce trade war between China and the United States, prompting investors to flee the stock market and turn to less risky assets.
In his comments, Kerry Craig, a global market strategist at Morgan Assets, said that in the United States, the stock market is often used as a political tool as a barometer of economic or political success. Recent tit-for-tat tariff increases have increased the risk of erosion of market earnings so far this year. However, although the S& P 500 index has fallen more than 4% since its high at the end of April, it is still up 12% compared with the beginning of the year and is up more than 20% compared with its low in December last year. Therefore, before the situation becomes more serious, politicians may be willing to pay less attention to market impact, raising doubts about whether the United States will resolve the breakdown of negotiations as soon as possible in accordance with market trends.
"In addition, due to the lack of a clear agenda for meetings between Chinese and American negotiators, the market may become more volatile, especially if no substantive information is written on the tweet." "Risk aversion flows to the yen, and yields on Swiss francs and government bonds are likely to test new lows in countries such as Australia," he said.
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