Contest Trader

Don't miss the chance to cash-in prizes totaling

$10.000
Register here for the Ultimate demo trading competition

Trump burns all bridges on US-China commercial relationship – Market Analysis

Trump burns all bridges on US-China commercial relationship – Market Analysis

Trump tries to win political points fueling US-China trade war

The statements of two heads of governments of countries such as the United States and the United Kingdom have increased the fear of investors who had already been showing signs of evident concern since last week.

On the one hand, President Trump, in a Labor Day speech, with a clear electoral bias, has attacked China, declaring that his objective is to end America's reliance on the Asian country.

The president threatened to punish North American companies that create jobs abroad and wants the manufacturing industry to return home.

It has been a very aggressive statement, although the market is used to this type of outburst that, on many occasions, does not have continuity in the policies that are implemented and that are often only about political propaganda that is not translated into concrete actions.

Risk-aversion-heavy market environment

But the risk aversion sentiment had already started last week when it became known in the market that much of the latest rally in technological stocks was due to overexposure in derivatives of an Asian financial institution.

This lights the investors' alarms, given the buyer flow's lack of solidity and its enormous vulnerability.

That is why Trump's speech, although of a purely political nature, has added fuel to the fire since these technological values would be the most directly affected in the event of a policy of total rupture with China.

And the most worrying thing is that as the date of the elections approaches, President Trump's types of statements could go further.

TECH100 experiences its fourth consecutive day of sharp declines, with a loss of 3% in the futures market, before the start of the North American session.


The area of most significant relevance in terms of support is in a range between 10,800 and 11,000. Below this critical level of support, falls could precipitate dramatically, approaching the 100-day SMA, currently at 10,300.

The nature of positioning through derivatives, which, as we have known, is the one with the most significant weight now in the index, encourages this type of abrupt downward movement that forces traders to close positions of increasing amounts as the index's price is descending.

Only the entry of real money into the market could stop this decline. Still, now, there are no indications of this, given the doubts about the correct valuation of technology companies at current market prices.

Old news from the BREXIT front

On the other hand, British Prime Minister Boris Johnson has thrown cold water on the Brexit negotiation process.

Johnson has stated that he plans to roll back part of the previously approved agreements, and as a result, his legal advisers have resigned.

The news struck the Sterling Pound. GBP/USD is already trading near the 1.3000 support, and below this level, it works its way to the 1.2750-1.2800 zone.

The more risk-averse environment in the market contributes to this drop as the US Dollar is being bought across the board by flows searching for safe-havens.

Esta información/estudio preparada por Miguel Ruíz (“el analista de estudios”) no tiene en cuenta los objetivos específicos de inversión, la situación financiera o las necesidades particulares de una persona. El analista de estudios es, principalmente, responsable del contenido de este informe de estudio, en parte o en su totalidad, certifica que los puntos de vista sobre las compañías y sus valores expresados en este informe reflejan con exactitud sus puntos de vista personales, y como consecuencia, toda persona que actúe basándose en ellos lo hace bajo su propio riesgo.

El estudio proporcionado no constituye los puntos de vista de JME Financial Services (Pty) Ltd., ni es una invitación a invertir con JME Financial Services (Pty) Ltd. El analista de estudios certifica, además, que ninguna parte de su remuneración ha sido, es o será directa o indirectamente relacionada con recomendaciones o puntos de vista específicos expresados en este informe.

A partir de la fecha en la que se publique el informe, el analista de estudios y su esposo/a o familiares que dependen financieramente de dicho analista, no mantendrán intereses en los valores recomendados en este informe (“como “intereses” se incluyen la titularidad directa o indirecta de los valores).

El analista de estudios no está contratado por JME Financial Services (Pty) Ltd. Le animamos a buscar asesoramiento con un consejero financiero independiente con respecto a la idoneidad de la inversión, en virtud de otra participación separada, cuando considere oportuno que es conforme con sus objetivos específicos de inversión, su situación financiera o, sus necesidades financieras particulares antes de comprometerse a invertir..

Las leyes de la República de Sudáfrica regirán cualquier reclamación relacionada o que surja de los contenidos de la información/estudio proporcionado.