No Phase One? PMI Green Shoots Wilt

Shares in Europe opened higher on Wednesday, which follows a rocky session in Asia, while Wall Street is pointing to a firmer start. Safe haven currencies including the and have been making gains. has joined in on the safe-haven flows while is rising.

Trade war: What happened to phase one?

December has started with a bang. Thanks to new fronts opening up in the trade war, Wall Street has given up the best part of a month’s worth of gains in two days. Up the stairs and down the lift. Short term, we are looking for current levels for some stabilization in the . That is around 27,300, which was the top of the price range from July through November. If more declines are on the cards, we’d look to the equivalent price point in the , which comes in at 3020 for said stabilization.

The latest comments from the US President are ominous for the phase one deal that markets had been pinning their hopes on. We hadn’t expected any kind of deal to be completed in 2019, but Trump’s suggestion of “late 2020” is much later than the first quarter of 2020 we had pencilled in. China, for their part seems politically less able to strike a trade deal given the US bills on Hong Kong and now the Uighurs in Xinjiang. We tend to think Trump is talking tough and that phase one can still be done sooner than the end of 2020. There is a “happy place” where China offers enough that Trump feels able to rollback some tariffs but we are not there yet.

PMI green shoots wilt

We are seeing another attempt to buy the dip in early trading across European markets. It didn’t pan out yesterday. We think markets could be ready to

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