US-China trade tensions at the centre stage – Danske Bank

The US-China trade tensions continue to be the main theme in the markets as the markets calmed down yesterday and rebounded during the day as focus shifted from fears of a trade war to signs of negotiations, points out the research team at Danske Bank.

Key Quotes

“The scenario we believe most in is the one in which the US and China enter negotiations and things gradually calm down and we see a kind of 'grand bargain'. The second scenario is the one in which Trump strikes back at China's retaliation and we enter a trade war. So far there are no signs of this, though, and neither of the countries have any interest in a trade war that will damage both sides and has no winners. If we are right and we move into the first scenario, we may have seen the worst in the markets and could see more relief soon.”