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    United States (US) Equities Falls as US-China Trade Conflict Escalates

    JN Fund Managers
    JN Fund Managers

    US equities fell today amid escalated trade tensions between the US and China. The three major US indices, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite declined by 2.41%, 2.38% and 3.41% respectively. This came on the heels of a statement released by China today that it would impose higher tariffs on a range of US goods. This was in retaliation to the US increasing tariffs last Friday on $200B worth of Chinese goods. The Chinese finance ministry indicated that on June 1, 2019 it plans to set import tariffs ranging from 5% to 25% on 5,140 US products worth approximately $60B.

    The Chicago Board Option Exchange Volatility Index (VIX), an indicator of the level of fear in the financial market, soared 28.12% for the day to close at 20.55, the highest level since January 2019. As such, investors flocked into safe-haven assets such as US treasuries. This resulted in the yield on 2-yr and 10-year treasuries declining by 8 basis points to 2.19% and 7 basis points to 2.40%.

    We believe that if the US and China are unable to settle their trade dispute soon, we could see more reduction in global growth forecast this year. We continue to urge investors to ex-ercise caution and to remain informed on these developments. We recommend that clients be guided by licensed investment professionals before making changes to their portfolios.

     

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