“It’s Not A Happy Start”: Second Half Opens With Sea Of Red Across Global Markets

Monday, July 2, 2018
By Paul Martin

by Tyler Durden
Mon, 07/02/2018

JPMorgan’s warning that the Chinese rout is far from over “as 2018 becomes 2015” proved prescient, and overnight global sentiment quickly shifted to “risk off” as soon as China opened for trading, leading to a resumption of selling first in China, then across Asia, and finally around the world, resulting in a market snapshot which this morning is another sea of red ahead of this Friday’s deadline for the US-Chinese trade war, when 25% tariffs kick in on some $34 billion in Chinese exports to the US.

The underlying concerns are well known: trade-war jitters, political risk in Europe and divergence in fiscal and monetary policy and economic performance between the US and the rest of the world weighed on investors’ minds.

“It’s not a happy start to the second half,” Saxo commodity head Ole Hansen said. “Trade war concerns, U.S. sanctions, Trump’s rants and political problems in Europe, as well as worries about slowing emerging-market growth are all playing their part.”

Political risks dragged the euro and pound down, the Mexican peso’s rally was short lived after the election of the country’s first leftist president in decades, while Treasuries climbed and dollar strength again slammed emerging markets. Overnight, Mexico’s Andres Manuel Lopez Obrador won a decisive victory in the Presidential election with quick count results showing he received 53.0%-53.8% of votes, while an exit poll also showed that Lopez Obrador is set to get a majority at the lower house.

Once again, it started with China, whose stocks took another battering on Monday as selling returned amid concern about a falling currency, housing curbs and the impact of trade tariffs. The Shanghai Composite Index extended last month’s 8% rout – with real estate and bank stocks heavily offered as leverage and credit exposure is under increasing pressure – sliding another 2.5% on Monday and bringing its bear market rout to -22% since the January high….

The Rest…HERE

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