Global markets on downturn after China tariff retaliation

Retreat in global equity markets persisted after China imposed retaliatory tariffs on $60 billion worth of imports from US last week. And harsh rhetoric of Beijing after negotiations ended with no date set for continuing trade talks with US cast a pall on prospects of US -China trade deal. The S&P 500 extended losses 0.8% while the ICE US dollar index turned 0.7% higher last week.

Just one out of six major developed market stock indexes managed to rebound from sharp losses of previous week. Hang Seng was still the loss leader: it fell 2.1%. Three out of six major currencies reversed previous week’s dynamics against the US dollar, while the range of major currency pairs’ weekly fluctuations more than doubled as it shifted higher. The Pound kept the top spot in terms of percentage change: it dropped 2.1% against the US dollar.

While global markets are on alert for new US-China trade dispute developments, investors will be focused on multitude of US data this week. At the same time the Federal Reserve and Central Bank of Europe will publish their recent meetings’ minutes on Wednesday and Thursday respectively. With economic data providing more insight into robustness of US economy, the minutes are expected to shed more light on Fed policy makers assessment of US economic strength after Federal Reserve Chairman Jerome Powell’s assertion that officials didn’t see a strong case for moving interest rates in either direction.