Fear of Trade War Escalation Sends Global Equity Tumbling

  • Aug 05, 2019 BST
  • Team Kalkine
Fear of Trade War Escalation Sends Global Equity Tumbling

Global Markets: Equity benchmark indices in the United States were hovering in red, with the Dow Jones Industrial Average Index declined 866.45 points or 3.27% in day’s session, and trading at 25,618.56, the S&P 500 index dropped 95.99 points or 3.27% against the previous close and quoting at 2,836.06 and the technology benchmark index Nasdaq plunged by 310.19 points or 3.88% and quoting at 7,693.88 respectively, at the time of writing.

Global News: For the first time in more than a decade, the Chinese government let the yuan cross the psychological 7-per-dollar level on Monday, risking a backlash from Trump administration. As the outlook for the overall economy and business orders were weighed down by trade worries, non-manufacturing activity index declined to 53.7 from 55.1 the month before, the weakest level in three years and below the market expectations. Amid fears that the ongoing trade war would escalate due to the devaluation of yuan, main indices fell sharply on Monday, and Treasury yields declined, with 10-year yields reaching their lowest level since November 2016.

European Markets: The London’s broader equity benchmark index FTSE 100 traded at 183.21 points or 2.47% lower at 7,223.85, the FTSE 250 index snapped 381.75 points or 1.98% lower at 18,871.42, and the FTSE All-Share Index ended 95.38 points or 2.36% lower at 3,944.15 respectively. Another European equity benchmark index STOXX 600 ended at 369.43, down by 8.72 points or 2.31 per cent.

European News: The UK services PMI rose to a nine-month high of 51.4 in July from 50.2 in June while the all-sector PMI data showed the economy was still in stagnation. As investors sought safe-haven assets amid increasing US-China trade tensions and fuelled by a global rally in fixed income assets, broke the previous all-time low of 0.503% that had not been breached since August 2016 to sink as low as 0.491% on Monday. The pound hit a 23-month low against the euro amid the growing probability of a general election. Joining a sell-off in global markets, stock market indices fell sharply on Monday, and the FTSE 100 reported its worst day since early December.

London Stock Exchange (LSE)

Top Performers Stocks: TCG (THOMAS COOK GROUP PLC), AVON (AVON RUBBER PLC), and BOWL (HOLLYWOOD BOWL GROUP PLC) rose by 35.02 per cent, 5.79 per cent and 5.26 per cent respectively.

Top Laggards Stocks: NOG (NOSTRUM OIL & GAS PLC), TPT (TOPPS TILES PLC), and SHI (SIG PLC) reduced by 8.78 per cent, 8.55 per cent and 7.97 per cent respectively.

FTSE 100 Index

FTSE100 Index Chart: 5-days Price Performance (as on August-05-2019), after the market closed. (Source: Thomson Reuters)

Top Riser Stock: FRES (FRESNILLO PLC) rose by 4.75 per cent.

Top Fallers Stocks: HL. (HARGREAVES LANSDOWN PLC), PRU (PRUDENTIAL PLC), and JD. (JD SPORTS FASHION PLC) reduced by 6.83 per cent, 5.53 per cent and 5.24 per cent respectively.


Top Fallers Sectors: Financials (-3.41%), Technology (-2.94%), and Consumer Cyclicals (-2.77%).

Foreign Exchange and Fixed Income

FX Rates*: GBP/USD and EUR/GBP were trading at 1.2145 and 0.9224 respectively.

10-Year Bond Yields*: US 10Y Treasury and UK 10Y Bond yields were exchanging at 1.740% and 0.502% respectively. 

*At the time of writing

With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities. 

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