Summary:

• European stock benchmarks decline after bearish Asian session

• Bitcoin is once again testing $7000 handle

• Deterioration in the UK construction sector

Investors are still digesting the newest developments in the trade war theme that caused stocks around the world to decline sharply. AUD and JPY are among the top gaining currencies while the British pound underperforms against all its G10 peers. Gold trades significantly higher along with silver while oil prices slide ahead of DOE report.

Risk sentiment worsened as China announced it would impose duties on $50 billion US products, the move being a response to the list revealed by the US pointing more than 1300 goods for which tariffs could have been applied. As a result, the Japanese yen is the strongest currency in the G10 basket albeit the NZ dollar, being inversely correlated to risk appetite, is the second best one following the better than expected data regarding a budget surplus.

Many of the cryptocurrencies have seen their prices decline in today’s early trading with Bitcoin once again dropping towards $7000 mark. However, before we move on to the technical charts we will pay some attention to Taiwan as its authorities seek to regulate cryptocurrencies. Later on we will take a look at the crypto hedge fund industry as it is performing poorly in 2018.

Grains prices took a hit in the aftermath of the report coming from the Chinese Ministry of Commerce as it would impose a 25% tariff on 106 US products including agricultural ones, cars, chemicals as well as aircraft. The move is a response from the second world’s largest economy to lately imposed duties on Chinese goods and it ratchets up frictions between both economies exerting a ripple effect throughout financial markets all around the world.

Despite decent gains on Wall Street Asian markets did not follow and just the Japanese stock exchange managed to close up with a tiny 0.13% gain. On the surface, there is no doubt that a US-China trade dispute played a major role overnight as the Chinese Hang Seng closed 2.3% lower. Moreover, according to CCTV China is going to impose reciprocal duties on 106 US products including soybean.

Global financial markets settled down to some extent after having a tumultuous beginning to the new quarter. The US indices gained momentum yesterday on talks that the US-China trade dispute will not derail economic growth and hopes that US President Donald Trump is not actively looking to challenge Amazon’s business in spite of the fact he attacked the company.

European macro releases scheduled for today are already behind us. The Eurozone CPI reading came in line with the prior release while the unemployment rate moved from 8.6% to 8.5%. In the afternoon investors will be served with US readings concerning services sector as well as the weekly report on oil inventories.