Since the beginning of the year, the Chinese stock market (measured by the CSI300 index, red curve) has lost around 27%.

In contrast, the US share market (measured by the S&P500, black curve) is trading slightly above its January level, after recovering from the February crater which resulted from the Trump US301 steel/aluminium tariff bomb.

As the tariff discussion gained serious pace in March, the US and Chinese share markets stopped tracking each other and started to move in opposite directions.

And since the tariffs came into force during the first week in July, the two markets have materially torn away from each other in opposite directions.

Whilst the net effect of tariffs, retaliatory tariffs and further tariffs are yet to play out in full, they are at the minute acting as a blunt stake in the heart of emerging and European stock markets, not just the Chinese and Hong Kong markets.

It appears Trump’s war of blunt instruments continues to gather pace and drive global markets.

Mike

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