Asian stocks slipped on Wednesday on the spectre of a Sino-U.S. trade war ahead of an end of week deadline for U.S. tariffs on $34 billion worth of Chinese imports. Coming on the heels of escalating tensions between the United States and China over tariffs and investment restrictions, the injunction sparked selling in other U.S. chipmakers. Many investors fear Washington will go ahead with its plan to levy a 25% tariff on 818 product categories from China including cars on Friday, which Beijing has vowed to match with tariffs on U.S. products. They worry that the move could spark a full-scale international trade war and harm the global economy, especially as the Trump administration has threatened tariffs on imports from many other major economies. Washington has also threatened Europe with a 20% tariff on car imports while various countries have also already taken retaliatory steps against U.S. tariffs on steels and aluminum products. In parallel, China is putting pressure on the European Union to issue a strong joint statement against President Donald Trump’s trade policies at a summit later this month but is facing resistance.
In currencies, the EUR/USD stood little changed at 1.1665, keeping gains after Germany’s coalition settled a row over migration that had threatened to topple Chancellor Angela Merkel’s government. The GBP/USD pair has likely found a bottom at 1.3049, since the bullish divergence of the last two weeks indicates and could cross the stiff resistance of the last 30 days if the UK services PMI today be above estimates.
In commodities, Gold despite its lack of bullish fundamentals and the poor price action, gold is now technically oversold and has reached strong support with sentiment approaching potentially extreme levels. The conditions are in place for a rally. In Oil, traded up 0.6% at $74.58 per barrel, after rising above $75 for the first time in more than three years on Tuesday.
For today important economic release is the Services PMI affecting at first the GBP/USD movements.