This weekend marked the end of the first quarter. Looking back, it has been an interesting quarter with news coming from all corners. As usual, Donald Trump has dominated the news cycle with his policies leaving investors uncertain about the future. His trade war rhetoric has continued to bring cause more confusion among the investing community.
During the weekend, China responded to Trump’s policies by placing tariffs on more American products. The new tariffs target products like fruits, nuts, and meats which mostly come from the states that Trump won. In the statement, China claimed that the new tariffs will help offset the costs of the tariffs the United States placed on its steel and aluminum.
The new tariffs from China accelerates the amount of risks in the financial markets these days. However, they can also be viewed as a tactical calculation by China to show the United States that they can also act. Remember, China has not hiked tariffs on the key US exports like the Boeing airplanes and Soybeans which is an indicator that the new tariffs are just for bargaining purposes.
A report by Reuters said that the Trump administration is set to unveil the list of Chinese technology products to impose tariffs on. The new list will target products that are in the Made in China 2025 program. This is a Chinese program to improve the Chinese technology production.
As a response to the ongoing trade issues, global financial futures point to a low opening with the NASDAQ down by more than 30 points.
During the weekend, we received important data from Japan. The Tankan Large Manufacturers Index remained unchanged at 23. This was a point lower than the analysts’ estimates of 24. The same was true for the Tankan Large Non-Manufacturing Index which was at 23, a point lower than what analysts were expecting. The Tankan Big Manufacturing Index of 20 missed the analysts forecast of 23. This data shows that the Japanese economy might be having some difficulties. As a response, the Japanese Yen opened the markets slightly lower than its global peers.
The fall of Japanese sentiment is the first in two years and is primarily caused by the fear of a trade war and a strong Japanese Yen.
Another interesting data was from China. The country released the Caixin Manufacturing PMI data which missed analysts’ estimates. The data showed that the manufacturing in the country declined to 51 from last month’s 51.6. Analysts were expecting a growth of 51.8. China, as the world’s biggest manufacturer has consequential impacts on the global economy. A slow growth in the country could be interpreted as a sign of slow global growth.
During the weekend, cryptocurrencies continued to slide. Ethereum fell to below $380 while Bitcoin was below $7500. This marks one of the worst quarters for the cryptocurrencies, which have dominated the markets in the last couple of months. In the first quarter, the currencies have faced the challenge of regulations and the immediate ban of advertising on the top online advertising platforms like Google, Facebook and Twitter. This quarter, the slide on cryptocurrencies could continue as demand weakens.