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The tensions and themes driving international markets

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Major political issues, such as the trade war between superpowers the United States and China, are continuing to have ramifications for both economies, creating a knock-on effect for investors with international exposure.

Speaking with Nest Egg, ETF Securities co-head of sales Kanish Chugh discussed a few of the major themes dominating international markets at the moment. 

Trade tensions

The unique situation currently facing the United States is the unknown trade tensions between itself and China and how it will play out in the long term.

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“The back end of 2018 saw quite a bit of volatility. Come 2019, markets have been picking up at a fundamental level. We are now seeing a slowdown across the board,” said Mr Chugh.

“Recently at the G20, there was some hope that the US and China would resolve some of the trade issues,” said Mr Chugh, although at this stage, it’s uncertain where those talks will land. 

How low will the Federal Reserve go?

The Federal Reserve will look to cut rates, but over the short term, it is predicted to be a wait-and-see approach by the government, according to Mr Chugh. 

Strong numbers through unemployment suggests the Federal Reserve could take a slow approach to handing down any rate cuts. The Bureau of Labor Statistics suggests the total nonfarm payroll employment has increased by 224,000 in June and the unemployment rate decreased to 3.7 per cent.

Race for the White House 

The 2020 election will have a significant impact on the United States economy as the president needs to appear to be a strong and pro-America leader, but also have the economy humming, according to Mr Chugh. 

“[It’s a] fine balance between maximum pressure with trade negotiations with China and Europe, but when he comes into the 2020 election, that the economy is booming,” said Mr Chugh.

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The tensions and themes driving international markets
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