David Madden, market analyst at CMC Markets UK, says in his morning note:
The trade numbers from Beijing are likely to have struck a nerve with Mr Trump, and given that he thinks the US are winning the trade spat on account of the recent weakness in the Chinese stock market, he is likely to stick to his protectionist line. Beijing said they would retaliate should the US impose fresh tariffs, and traders are fearful they might weaken the yuan or target US firms operating in China.
Tim Cook, the CEO of Apple, warned President Trump that if he continues down the route of protectionism, it could hurt the company’s profits. The tech sector has been the standout performer of the US market this year, but it has come under pressure recently on account of the update last week from Washington DC that tighter regulation would be required for the industry, and in particular social media stocks like Facebook and Twitter.
Introduction: Trade war, UK and Turkish GDP in focus
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Tensions between the world’s two biggest economies over trade have deepened further, after China revealed a record trade surplus with the US on Saturday. Customs data showed it jumped to $31.05bn in August from $28.09bn in July, while overall export growth slowed to the slowest pace since March.
Donald Trump is yet to activate the threatened fresh tariffs on $200bn of Chinese goods imported to the US, but on Friday suggested duties on a further $267bn could be imposed. Hours before his threats, China announced measures to support some of the exporters affected by higher duties. Beijing has warned that it will retaliate, but has limited room to do so.
Analysts at JPMorgan said:
The overall sense is that the United States will continue to escalate the pressure until China submits to US demands which does not seem likely any time soon. Overall, the impact of tariffs and high levels of uncertainty will both continue to weigh on markets into the end of the year.
Asian stocks started the week in the red, falling for the eighth trading day in a row. Chinese stocks were among the biggest losers, with the blue-chip CSI 300 index falling 1.2% and Shanghai’s Composite shedding nearly 1%. Hong Kong’s Hang Seng lost 1.1%.
European shares are set for a mixed open.
A barrage of figures, all out at 9.00am BST, will shed some light on the health of the UK economy: monthly GDP for July, along with trade, manufacturing and industrial production and construction. Tomorrow we’ll get the latest labour market data.
It is also a big data week for the US. And on Thursday, the Bank of England, European Central Bank and the Central Bank of the Republic of Turkey hold their monthly meetings.
- 8am BST Turkey GDP for Q2
- 9.30am BST UK GDP for July
- 9.30am BST UK trade for July
- 9.30am BST UK Industrial production for July
- 9.30am BST UK Construction for July