Global stocks drifted lower during the first week of September (S&P500 -1.01%, MSCI Euro -2.68%, MSCI EM -3.12%) as US-China trade tensions continued to deteriorate. Even though President Trump had already threatened to impose tariffs on $200 billion of Chinese goods, he warned last Friday that “there was another $267 billion ready to go on short notice…”. Needless to say such a statement only led to further uncertainty and mounting signs of market stress at the very moment the White House launched a mole hunt to find out who was the source of the NYT anonymous editorial in which the whistleblower revealed that senior staff within the Trump administration worked against the President’s orders.
In this poisonous political climate, several major US tech companies wrote to the US Trade Representative asking to be exempted from the third round of tariffs, warning that a duty of between 10-25% “would cause broad, disproportionate economic harm to US interests”. Besides, tech stocks were hit hard in the wake of the grilling of top Twitter and Facebook executives by the Senate Select Committee on Intelligence. Facebook and Twitter dropped 7.2% and 13.33% respectively over the week, driving the tech sector lower (Alphabet Inc -4.38%, Amazon -3.01%, Apple -2.78%).
The broader market was also affected by a drop in energy stocks as oil prices weakened (Crude Oil WTI Oct-2018 futures down 3%) despite the recent hurricane season. By contrast, defensive sectors were more resilient (consumer staples and healthcare more specifically).
Find the full report here: https://www.trackinsight.com/weekly-flow-report/2018-09-07/global