All Trump’s announcements on China were rumored or reported. Market breathes a sign of relief

Nothing new here

Nothing new here
Markets shuddered early in Trump’s talk because there was a lot of sound and fury but when he got to the actual policies, there was nothing new.
It’s a series of studies and minor measures. Every one of them was rumored, leaked or reported ahead of time.

Trump: China raided our factories and gutted our industries

Trump says he will take action against China

Trump says he will take action against China
Strong comments to start, more to come. He brought Pompeo and Mnuchin, which is a hint of something big coming.
  • Chinese government has continually violated its promises to us
  • China unlawfully claimed territory in Pacific ocean
  • China’s coverup of the Wuhan virus allowed it to spread all over the world
We’re still in the preamble but the tough talk has the market worried.
  • We will be terminating our relationship with the WHO, redirect elsewhere
That’s not a factor for markets.
  • Will issue proclamation on US university research
  • Will ask for study to protect US investors (presumably from investing in Chinese stocks)
This was all rumored and isn’t a big deal.
  • Have started the process of eliminated policy exemptions that give Hong Kong special treatment
  • Directing his administration to “begin the process of eliminating policy exemptions that give Hong Kong different and special treatment” under a “full range” of agreements, from extradition to trade to technology. (Congress has much of this power)
  • Will sanction directly or indirectly individuals involved in suppressing Hong Kong
All this was rumored or reported.
Stocks go positive.

Major indices in Europe close sharply lower

For the week major indices close sharply higher

The major indices are closing the day lower with the UK’s FTSE 100 leading the way to the downside:
  • German DAX, -1.6%
  • France’s CAC, -1.5%
  • UK’s FTSE 100, -2.5%
  • Spain’s Ibex, -2.3%
  • Italy’s FTSE MIB, -0.7%
For the week, the major indices closed sharply higher with the France’s CAC and Spain’s Ibex leading the way:
  • German DAX, +4.7%
  • France’s CAC, +6.13%
  • UK’s FTSE 100, +1.2%
  • Spain’s Ibex, +6.3%
  • Italy’s FTSE MIB, +5.2%

Looking at the daily chart for the German DAX, the index moved above its 100 day moving average for the 1st time since February 24 this week. That moving average currently comes in at 11559.22. The price is closing above that level trading today giving a more positive bias despite the declines on the day.. The low today in the German DAX reached 11575.74 – above that key moving average level.

Canada Q1 GDP -8.2% vs -10.0% expected

Canada first quarter GDP

Canada, GDP
  • Prior was +0.3% (unrevised)
  • -2.1% q/q drop
  • Sharpest drop since Q1 2009
  • Household spending -2.3% in Q1, worst ever
  • Exports -3.0%
  • Imports -2.8%
  • Inventories -$3.7B
  • Full report
There’s nothing surprising in this report. Q2 is going to blow away the numbers we see here, especially with so much of Canada still locked down.

Trump lambastes Twitter, says it is doing nothing about the lies and propaganda from China

Trump tweets out more criticism against Twitter

Twitter is doing nothing about all of the lies & propaganda being put out by China or the Radical Left Democrat Party. They have targeted Republicans, Conservatives & the President of the United States. Section 230 should be revoked by Congress. Until then, it will be regulated!

And so the drama continues to unfold. Once again, just be mindful of the situation here in case it creates further negative spillovers for tech stocks in general.

China repeats that Hong Kong is part of its internal affairs, no other country has the right to intervene

Comments by the Chinese foreign ministry

  • Says that China opposes US actions, calls it ‘pure nonsense’
  • Urges US to stop frivolous political manoeuvres
China continues to repeat the same message as it has been doing when it comes to Hong Kong and the US, so there’s nothing new in this.
All eyes will now be on US president Trump and his announcement later today. As such, we can expect the market to be more defensive amid the stirred tensions for the time being.