Trade war in action: ban Apple and the collapse of quotations for all indexes

Торговая война в действии: запрет Apple и обвал котировок по всем индексам

On the background of the “biggest bargain” announced by Donald trump, returning to Washington from Argentina, the US market is experiencing the worst year in the 10 years since fell into negative for all indexes.

As soon as the prospects of a trade agreement between China and the United States is increasingly shrouded in pessimistic forecasts in light of recent events, the U.S. stock market is depressed because the market situation is fundamentally different from traditional market conditions, “the annual Christmas rally”, which is 12 times pushed to the top indices during the last 16 years.

The S & P500 index showing the capitalization of the 500 largest U.S. companies after declining last week by 4.6%, and it’s worse drop since March, on Monday, fell another 1.2 per cent to a new low for 8 months.

At that time, before the end of the year remains only three weeks, all of the key stock indices went into minus in comparison with its beginning, predicting the market’s worst annual result in all the time since the financial crisis of 2008. The Dow Jones lost 1,42% and Nasdaq — 0,89%.

Believing in the prospect of an end to a trade war, the euphoria of traders took place after last week in Canada, was arrested Meng Wanzhou Finance Director and daughter of co-founder of Chinese tech giant Huawei.

In response, the Chinese foreign Ministry summoned the American Ambassador and threatened to “mirror action”. At the same time, the Chinese government has banned Apple to sell in the country, all iPhone models except the last one: a Chinese court has acknowledged that the company had violated two patents Qualcomm — to apps for photo editing and touch-screen functions.

The market is concerned about the expectations of the synchronous economic slowdown in Europe, USA and China, according to analysts Legal & General Investment Management. According to the asset Manager Legal & General Investment Management on Monday, of Commerce noted the slowdown in exports tripled — from 15.5% in October to 5.4% in November. This is superimposed on the significant uncertainty surrounding the trade war and makes it unclear whether the China to accelerate the economy through stimulus measures.

Meanwhile, in the US the effect of the tax reduction is gradually exhausted, and the next year corporate profits, which have allowed companies to buy back shares from the market and maintain the permanent growth of quotations can significantly worsen, says a strategist at Morgan Stanley.

Stocks continue to fall as the market had not yet experienced the final capitulation of hedge funds: their equities remain well above levels observed in other market lows during the last decade, says the President of Sundial Capital Research Jason Goepfert: “Hedge funds are fleeing the stock, but not fast enough, says Goepfert. — Their yield still shows a stable positive correlation with the dynamics of the S & P 500, indicating that a significant reduction of their positions did not happen, despite the volatility”.

The development of pessimistic scenario, which, as it seemed, managed to be avoided, can create problems the majority of peripheral countries, including Ukraine.

It should be emphasized, if the situation deteriorates in the economies of our main trading partners and lower commodity prices, as happens in a crisis, there will come hard times for economies with undeveloped markets. In most peripheral countries, which include Ukraine, can begin complexity, determines the dependence of those countries from the global economic centres, in particular the USA and China.