Why markets are all over the place right now
18th June 2018 11:51
by Rebecca O'Keeffe from interactive investor
Markets are finally beginning to wake up to the risks of a global trade war, with equities falling across the globe.
The negotiating style of President Trump had allowed investors to assume that his threats were hyperbole and part of his unique diplomatic style, and that he would step away from the brink rather than risk undermining the positive impact his previous policies have had on the stock market.
However, the US decision to press forward and take on China makes the risks far more pronounced and the real danger is that the Chinese retaliation may start a chain reaction that is difficult to stop – especially as Trump likes to have the last word.
The current position on tariffs is unlikely to cause a full-blown rout for markets, but the prospect of further escalation and reprisals could cause considerable damage to the global economy, increasing the risks and anxiety.
Oil prices remain under pressure ahead of this week's OPEC meeting, as expectations grow that Russia and OPEC producers will increase agreed production over the coming months, reversing the current pact that had restrained crude output.
Source: interactive investor Past performance is not a guide to future performance
However, the battle lines are being drawn as Iran wants to block any proposed increase in output, and they potentially have the support of Venezuela and Iraq on their side.
Tensions between leading OPEC producers Saudi Arabia and Iran have been rising in recent months, accentuated by the US withdrawal from the Iran nuclear agreement and escalating military action in Yemen.
OPEC typically put aside political rivalries and agree on economic ones, but there is no disputing the current differences, which will make this meeting much more controversial and uncertain.
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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.