27 Aug by Westpac Bank

US equities fell sharply after the US-China trade war escalated unexpectedly with tariff increases from both sides. The US dollar and US interest rates also fell.

US equities were contained amid little fresh news, the S&P500 unchanged. US interest rates are slightly higher following some hawkish Fed comments, tonight’s speech by Fed Chair Powell’s eagerly awaited.

The Fed minutes didn’t provide any major clues regarding future easing, leaving markets largely unruffled. US equities had already risen and simply preserved gains, the S&P500 up 0.8% currently, while the US dollar and some US interest rates are slightly higher.

The global mood soured slightly, after US comments on US-China trade and the Italian PM resigned. The S&P500 is down 0.6%, and US interest rates and the US dollar are slightly lower.

The mood remained upbeat, following the latest iteration in the US-China trade war. Markets are also speculating that Friday’s global central bank gathering in Jackson Hole may be supportive for financial conditions. The S&P500 is up 1.3%, following gains in Europe and Asia; and the US dollar and interest rates are slightly higher.

An absence of negative news seemed to push US equities higher, the S&P500 closing up 1.4%. US interest rates firmed slightly, while the US dollar closed unchanged. US official Kudlow indicated over the weekend that US-China trade talks are progressing.

US equities are little changed, opening weaker following Chinese comments on the trade war, and then recovering after some solid US economic data. An ECB official signalled significant stimulus, causing global bond yields to fall further, while currencies were mixed.

Sentiment soured again, the S&P500 down 2.7% despite little fresh news of note. Interest rates and commodities followed suit, and the US dollar rose.

Sentiment rebounded after the US de-escalated its trade war with China. The S&P500 is up 1.5%, and interest rates, the US dollar, and most commodities are higher. US inflation data was slightly stronger than expected.