Home Markets 2018 Ended in Trade Tension, High Hopes for 2019

2018 Ended in Trade Tension, High Hopes for 2019


Traders observed an increase in the equity worldwide, starting Monday. The primary reason for this rise is the impending and hopeful resolution of the trade conflict between China and the United States.

The trade dispute between China and the U.S. alarmed some investors. The overall year-end markets looked bleak as well.

S&P 500 Index kickstarted the trade optimism on Saturday after U.S. President Donald Trump reported possible progress with China’s President Xi Jinping. On the other side of the world, China was less hopeful and mentioned that Xi wanted to talk about reasonable compromises which will benefit both countries.

The investor optimism affected the European and Asian markets after the boost in U.S. equities.

It is remarkable how 2018 left the trade market with worries about stunted economic growth and trade tension. The Asian, European, and U.S. shares experienced the same unfortunate outcome.

Shannon Saccocia, the chief investment officer at Boston Private, predicted that there would be an inevitable overflow to the U.S. if the European and Chinese economies go downhill.

In 2018, the S&P 500 Index had an overall six percent reduction, its most substantial downturn since the financial crisis in 2008. In December, it had a nine percent loss, its most significant decline since the Great Depression.

Outside Japan, the STOXX 600 had a decline of more than 13 percent while the Asia-Pacific stocks had a drop of 16 percent.

Saccocia shared insights on the possible implication of a blow to the Chinese economy. Saccocia anticipated a more rapid settlement on the U.S.-China trade conflict, and this resolution will advance global equities.

On Monday, research data revealed an improvement on the Chinese manufacturing and service sectors.

The available figures on the rise of equities are the following: the S&P 500 .SPX boosted 0.85 percent or 21.11 points, MSCI’s .MSCIEF gained 0.32 percent, Dow Jones Industrial Average .DJI gained 1.15 percent or 265.06 points, .MIWD00000PUS boosted 0.66 percent and the Nasdaq Composite .IXIC earned an additional 50.76 points or 0.77 percent.

Over the two months, investors opted for lower-risk investments. This trend reflected on the drop of yields on U.S. Treasuries.

10-year Treasury Note yielded 2.686 percent, a lower return than the previous 2.738. This significant change mirrors the forecast of deceleration or suspension in the Federal Reserve’s advancement of interest-rate increases.

The decline on U.S. treasury brought a blow on the dollar currency in the past weeks. There was a 0.3 percent reduction observed in the dollar index .DXY. This dollar index estimates the value of the U.S. dollar in contrast to six different currencies.

The U.S. dollar had a six-month low value against the Japanese yen (JPY=). Meanwhile, the euro gained 0.2 percent but it had a decline of almost 5 percent against .DXY.

However, experts anticipate a greater yearly percentage increase in .DXY since 2015.

For the oil industry, Brent Crude and U.S. West Texas Intermediate crude had a 1.11 percent and 0.18 percent increase.