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Trade and tech uncertainty will boost ‘safer’ assets

Friday, June 7, 2019


US President Donald Trump’s decision last month to intensify the US-China conflict by raising the tariff rate and targeting Chinese tech firms is straining stock markets and making government bonds more attractive. Marking a dangerous new phase, sentiment towards the tech sector is deteriorating, after powering the stock market 'bull run' for a decade.


  • Uncertainty over both US policy and geopolitics globally will continue to make the dollar more attractive, outweighing Fed dovishness.
  • Emerging markets enjoyed a surge in inflows from January-April 2019, but suffered sharp outflows in May, and investors will remain cautious.
  • The VIX Index, Wall Street’s so-called ‘fear gauge’, has surged by around 50% since May 3, and is likely to remain elevated.
  • Rising US output means that the Brent crude oil price is likely to stabilise rather than rebound, having fallen by about 20% since April.

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